Senate Republicans are looking to repeal a controversial consumer bureau rule banning companies from using forced settlements to resolve disputes with customers.
GOP senators aim to vote to repeal the Consumer Financial Protection Bureau’s (CFPB) rule on forced arbitration before a window to do so with only 51 votes closes this week.
Republicans are attempting to shore up enough votes from their slim majority to repeal the CFPB rule under the Congressional Review Act, which gives lawmakers 60 legislative days to repeal an executive branch rule after it is finalized.
The House has already passed a repeal resolution, and Senate Republican aides said Tuesday that the upper chamber could vote to nix the rule within days.
The CFPB in July issued a rule that bans banks and credit card companies from writing clauses into customer contracts that protect the firms from class-action lawsuits. So-called forced arbitration clauses require customers to resolve any disputes with the firm through a third-party mediator, and bans them from suing the company.
Repealing the rule would be a victory for Republican leaders and CFPB critics who’ve long tried to curtail the agency’s power and influence. Business groups have slammed the regulation and the analysis used to justify it, claiming the rule would help no one but trial lawyers.
The Treasury Department and Comptroller of the Currency have also criticized the rule, warring with CFPB Director Richard Cordray and top Democratic lawmakers in op-eds and interviews.
Democrats and progressive political groups have fiercely defended the rule, insisting it would ensure vulnerable consumers have their day in court when they’ve been defrauded by banks or credit card companies.
The rule’s repeal depends on whether enough moderate or populist Republicans join the rest of their party to repeal the rule. GOP Sens. Lindsey Graham
Lindsey Olin GrahamGOP lawmaker: Mueller should 'come to Congress' Overnight Defense — Presented by Huntington Ingalls Industries — Trump nominates Shanahan as Pentagon chief | House panel advances bill to block military funds for border wall | Trump defends Bolton despite differences Graham to support Defense pick he previously declared his 'adversary' MORE (S.C.), Lisa Murkowski
Lisa Ann MurkowskiMoore's bid for Federal Reserve looks increasingly shaky Patricia Arquette pushes for Equal Rights Amendment at hearing Senate GOP women pose obstacle for Moore as Fed pick MORE (Alaska), Susan Collins
Susan Margaret CollinsThe Hill's Morning Report — Trump escalates trade war with China as talks continue Maxine Waters, Stacey Abrams among political stars in demand for graduation speeches Overnight Health Care: Trump wants HHS to help Florida with drug imports | Graham calls inaction on drug prices 'unacceptable' | Abortion battles heat up with Kavanaugh on Supreme Court MORE (Maine), John Kennedy
John Neely KennedyMORE (La.) and Rob Portman
Robert (Rob) Jones PortmanOn The Money: House chairman issues subpoenas for Trump's tax returns | Trump touts trade talks as China, US fail to reach deal | Five things to know about Trump's trade war with China | GOP offers support for Trump on tariffs The Hill's 12:30 Report: Dems raise stakes with talk of 'constitutional crisis' On The Money: White House files notice of China tariff hikes | Dems cite NYT report in push for Trump tax returns | Trump hits Iran with new sanctions | Trump praises GM for selling shuttered Ohio factory | Ex-Im Bank back at full strength MORE (Ohio) have not said how they’ll vote on the rule.
Senate GOP leadership began making the case for a repeal vote Tuesday. Senate Majority Whip John Cornyn
John CornynThe Hill's Morning Report — Trump escalates trade war with China as talks continue Trump Jr. subpoena sparks internal GOP battle Ted Cruz: There's no need for another subpoena for Donald Trump Jr. MORE (R-Texas) called on his colleagues to repeal the “harmful regulation that imposes obvious costs and offers invisible benefits.”
Cornyn called arbitration “a widely accepted method of resolving disputes between consumers and banks and other financial institutions.”
“And it actually increases the benefit that flows to the consumer, as opposed to the alternative, which is class-action lawsuits, which enriches lawyers where consumers get pennies on the dollar,” he said.
A critical Treasury Department analysis of the rule released Monday argued the CFPB measure would lead to 3,000 more class-action suits over the next five years. The department claims those suits would impose more than $500 million in legal defense fees, giving $330 million to plaintiffs’ lawyers.
The CFPB said Treasury's report "rehashes industry arguments” that were ”solidly refuted in the final rule."
"Banks, credit unions, and other companies file class-action lawsuits to pursue justice when they are harmed as a group, and our rule restores consumers’ right to do the same,” CFPB said.
“Our rigorous analysis of the costs and benefits of the rule found that mandatory arbitration clauses allow companies to avoid accountability for breaking the law and cost consumers billions of dollars by blocking group lawsuits.”
CFPB reported that more than 34 million consumers received $1 billion in payments through lawsuits over the past five years. Arbitrators awarded a total of about $360,000 in relief to 78 consumers in two years of arbitration cases the CFPB studied.
