Just a day after the Consumer Financial Protection Bureau revealed its new rule to ban companies from using mandatory arbitration clauses, and Senator Tom Cotton, R-Ark., is already fighting to get it rescinded.
"The CFPB has gone rogue again, abusing its power in a particularly harmful way. The Bureau's new rule on arbitration clauses ignores the consumer benefits of arbitration and treats Arkansans like helpless children, incapable of making business decisions in their own best interests,” said Cotton.
“This morning I've started the process of rescinding this rule using the Congressional Review Act. The last thing Americans need is more anti-business regulation that will prompt frivolous lawsuits while hurting consumers," he said.
The new rule mainly pertains to consumer financial products like credit cards and bank accounts that have arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing.
Mortgages, however, are not included. The CFPB noted in its announcement that Congress already prohibits arbitration agreements in the residential mortgage market.
The Congressional Review Act that Cotton refers to, found in detail here, established expedited (or “fast track”) procedures by which Congress may disapprove a broad range of regulatory rules issued by federal agencies by enacting a joint resolution of disapproval.
Under the rule, for initial floor consideration, the act provides an expedited procedure only in the Senate.
However, House Republicans already side with Cotton.
After the new rule came out, Financial Services Committee Chairman Jeb Hensarling, R-Texas, said, “This bureaucratic rule will harm American consumers but thrill class action trial attorneys. In releasing this rule today, Director Cordray ignored a prior request by the acting Comptroller of the Currency that he work with the OCC to resolve its potential safety and soundness concerns.”
“As a matter of principle, policy, and process, this anti-consumer rule should be thoroughly rejected by Congress under the Congressional Review Act. In the last election, the American people voted to drain the D.C. swamp of capricious, unaccountable bureaucrats who wish to control their lives,” said Hensarling. “Congress must work with President Trump to make good on this mandate by fundamentally reforming the CFPB and dismantling the Administrative State.”