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

Senate Votes To Overturn Rule That Could Have Meant Higher Credit Card Rates And ‘A Bonanza For Trial Lawyers’


“Congress Votes to Overturn CFPB Arbitration Rule” (“Congress Votes To Overturn CFPB Arbitration Rule,” The Wall Street Journal, 10/24/2017)

“The vote reflects the effort of the Trump administration and congressional Republicans to undo regulations that the GOP argues harms the free market. The measure now moves to President Donald Trump’s desk for his signature. White House press secretary Sarah Huckabee Sanders said the president applauded the vote. ‘The rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers,’ Sanders said.” (“Senate Votes To Repeal Rule Allowing Consumers To Sue Their Banks,” The Associated Press, 10/24/2017)

SENATE MAJORITY LEADER MITCH McCONNELL (R-KY): “Since its genesis, Republicans have criticized the CFPB for its lack of internal and external accountability…. [A]s a general rule, the Director answers to no one.  At least in this case, however, the CFPB is going to answer to Congress.” (Sen. McConnell, Press Release, 10/24/2017)


‘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)


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)


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)

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)



Related Issues: Economy, Regulations, Congressional Review Act