Reversing A Regulation That ‘Would Hurt Consumers And The Economy’

‘We Passed This Congressional Review Act Resolution To Protect Consumers’

SEN. MIKE CRAPO (R-ID), Senate Banking, Housing, and Urban Affairs Committee Chairman: “[T]he entire purpose of this rule is to promote class action litigation and to stop arbitration resolution when there is a dispute…. The CFPB failed to demonstrate that consumers will fare better in light of its arbitration rule. In fact, they may be worse off.” (Sen. Crapo, Congressional Record, S. 6740-6742, 10/24/2017)

SEN. McCONNELL: “The CFPB, which claims to protect consumers, seems to have found a way to actually harm them more. By eliminating a key settlement tool, consumers who are found to have been harmed by bad actors would receive less compensation under the CFPB’s regulation. The Treasury Department released a study showing how this regulation has little to do with consumer protection and everything to do with lining the pockets of trial lawyers…. We passed this Congressional Review Act resolution to protect consumers from wrong doing, while avoiding frivolous lawsuits that will only drive up costs for the millions of Americans who carry a credit card.”  (Sen. McConnell, Press Release, 10/24/2017)

Currency Comptroller: ‘A Consumer … Could See Credit Card Rates Jump’ While ‘The People Making Millions Are The Lawyers’

KEITH NOREIKA, Acting U.S. Comptroller of the Currency: “In my view, the CFPB has failed to provide the data to support that case and failed to disclose the costs to consumers that will likely result from the rule’s implementation. Consumers deserve better, and so do small and regional banks…. I had questions about the impact of the rule on the safety and soundness of community banks and its effect on consumers that the CFPB’s analysis did not answer. I asked Director Richard Cordray to hold off publishing the rule so that the Office of the Comptroller of the Currency could conduct an independent review of the data and analysis used to develop and support the rule. Instead, the CFPB pushed ahead. It published the rule on July 10 and only afterward provided the data and analysis for the OCC’s review.” (Keith Noreika, Op-Ed, “Senate Should Vacate The Harmful Consumer Banking Arbitration Rule,” The Hill, 10/13/2017)

• NOREIKA: “In September, OCC economists completed their review of the CFPB’s analysis. Their review found the data actually show an 88 percent chance of the total cost of credit increasing, and the expected increase is almost 3.5 percentage points. That means a consumer, living week to week, could see credit card rates jump from an average 12.5 percent to nearly 16 percent. The CFPB failed to disclose that observed effect that was apparent in its data.” (Keith Noreika, Op-Ed, “Senate Should Vacate The Harmful Consumer Banking Arbitration Rule,” The Hill, 10/13/2017)

• NOREIKA: “The CFPB’s own data also show that when consumers turn to arbitration, they receive higher settlements more quickly than when they are forced to rely on class action lawyers to fight their case. Class action lawsuits often involve more claimants and may generate big headline settlement figures, but the people making millions are the lawyers when the average individual payout of such suits is just $32.” (Keith Noreika, Op-Ed, “Senate Should Vacate The Harmful Consumer Banking Arbitration Rule,” The Hill, 10/13/2017)

Treasury Department Analysis Shows The Regulation ‘Would Hurt Consumers And The Economy’

THE WALL STREET JOURNAL: “[A]ccording to a new Treasury analysis of the CFPB’s 2015 study, the rule would hurt consumers and the economy. Consider: Only 13% of class actions that the CFPB studied resulted in a recovery for members. In the average case, plaintiffs received $32 while attorneys hauled in more than $1 million. The average arbitration award was $5,389. Businesses typically also covered all arbitration costs for consumers.  One reason the typical payout in class actions was so meager is that payments to members wasn’t automatic in 60% of settlements. Members usually had to file claims to obtain awards, and only in about 4% of cases did they do so. The primary beneficiaries of the rule are attorneys who reeled in 31% of consumer payouts.” (Editorial, “Richard Cordray’s Bad Numbers,” The Wall Street Journal, 10/22/2017)

• “The consumer bureau’s own data showed that the rule would transfer $330 million from businesses to plaintiff attorneys over the next five years. Businesses would also have to spend more than $500 million on defending lawsuits and $1.7 billion on settlements.” (Editorial, “Richard Cordray’s Bad Numbers,” The Wall Street Journal, 10/22/2017)

CFPB Bureaucrats Issued ‘A New Rule That Could Clear The Way For More Class Action Lawsuits’ ‘Over The Opposition Of’ Elected Officials

“The CFPB’s rule prevents companies from including in consumer contracts any arbitration clause that blocks class-action lawsuits … Such clauses are commonly used for a range of financial products, including credit cards, certain auto loans, payday loans and private student loans.” (“Consumer Agency’s Arbitration Move Sets Off GOP Showdown,” The Wall Street Journal, 7/10/2017)

• “Consumer Financial Protection Bureau Director Richard Cordray completed a rule proposed in May 2016 over the opposition of Trump administration officials and Republican lawmakers. The move prompted a rebuke from acting Comptroller of the Currency Keith Noreika …” (“Consumer Agency’s Arbitration Move Sets Off GOP Showdown,” The Wall Street Journal, 7/10/2017)

• “…a new rule that could clear the way for more class action lawsuits against banks and other financial firms.” (“New Rule Clears The Way For More Class-Action Lawsuits Against Banks,” NPR, 7/11/2017)

SEN. MIKE CRAPO (R-ID): “This is a rule to benefit the plaintiffs’ bar.” (“Congress Votes to Overturn CFPB Arbitration Rule,” The Wall Street Journal, 10/24/2017)