Congress Must Roll Back CFPB’S Costly Arbitration Rule

Washington — Earlier this week, the Consumer Financial Protection Bureau (CFPB) issued a new rule intended to ban financial service providers (banks, credit card companies, small dollar lenders, etc.) from using mandatory arbitration clauses to prevent consumers participating in class action lawsuits. According to The Heritage Foundation, the “Arbitration Rule is just the latest of many costly regulatory outrages perpetrated by the CFPB, an unaccountable bureaucracy that offends the Constitution’s separation of powers and should be eliminated by Congress.” House Financial Services Chairman Jeb Hensarling and a trio of Senators — Banking Chairman Mike Crapo, and Senators Tom Cotton and Pat Toomey — declared their intent to use the Congressional Review Act (CRA) to overturn the rule. Heritage Action released the following statement from chief executive officer Michael A. Needham:

“After years of watching Richard Cordray and the unaccountable CFPB run roughshod over our economy, Republicans are now in a position to fight back. Heritage Action commends Chairmen Hensarling and Crapo and Senators Cotton and Toomey for their swift public commitment to disapprove of a big-government rule that is all but certain to leave consumers worse off.”

Earlier this week, Hensarling told radio host Hugh Hewitt that the House will move forward with the disapproval process “so fast it’ll make your head spin.” He continued:

“We’re waiting for the proper citation because we have to allow for the rule to actually be published in the federal register. The language is drafted. It will come out of my committee and go to the floor of the House. I expect they’ll take it up in the Senate. The good news is I don’t believe that this will stand.”

Related:
Heritage: The Unfair Attack on Arbitration: Harming Consumers by Eliminating a Proven Dispute Resolution System (2013)
Heritage: Time to Eliminate the Consumer Financial Protection Bureau (2016)

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