
Repealing the Consumer Financial Protection Bureau's Ban on Arbitration (H. Joint Res. 111)
Do you support or oppose this bill?
What is H. Joint Res. 111?
(Updated July 15, 2021)
This bill was enacted on November 1, 2017
This resolution would overturn the Consumer Financial Protection Bureau’s arbitration agreements rule that was finalized on July 19, 2017. The rule was initially proposed during the Obama administration, and prohibits financial firms from requiring users of credit services to sign mandatory arbitration agreements that preclude them from filing class action lawsuits, and is set to take effect 60 days after being finalized. Mandatory arbitration agreements require consumers to handle disputes through private arbitration rather than through the court system.
Under the Congressional Review Act, Congress is able to overturn regulations finalized within the last 60 legislative days with simple majority votes on a joint resolution of disapproval in both chambers and the president’s signature. CRA resolutions also prevent the federal agency that created the regulation from issuing a similar rule without being directed to do so by Congress.
Argument in favor
The Consumer Financial Protection Bureau benefits class action trial attorneys at the expense of consumers, who get better results through arbitration. The rule increases costs on financial firms who then pass costs on to consumers, and should be repealed.
Argument opposed
This is a cynical effort to undermine consumer rights that were enhanced by the Consumer Financial Protection Bureau’s arbitration agreement rule. Consumers should have access to class action lawsuits and the court system to resolve disputes with banks.
Impact
Consumers of financial products; financial firms offering such products; and the CFPB.
Cost of H. Joint Res. 111
A CBO cost estimate is unavailable.
Additional Info
In-Depth: Sponsoring Rep. Keith Rothfus (R-PA) introduced this bill to repeal the CFPB’s arbitration rule, which prevents financial firms from requiring consumers to sign mandatory arbitration agreements:
“The CFPB’s anti-arbitration rule hurts consumers and it’s another example of the problems caused by this rogue and unaccountable agency. We know that consumers get better results through arbitration than through class action lawsuits. Despite the fact that the agency acknowledged this fact in one of its own reports, the bureaucrats at the CFPB have decided they know better. The CFPB’s rule eliminates this effective process for consumers, and will punish consumers with decreased access to financial products, increased costs for such products, or both.”
Rep. Maxine Waters (D-CA) defended the CFPB’s rule:
“The Consumer Bureau’s forced arbitration rule ensures that consumers are not required to sign away their legal rights in order to open a bank account, obtain a credit card, finance a car, or obtain a private student loan… The rule is important for consumers and there is no sound public policy rationale for repealing it. It is outrageous that Republicans are trying to nullify the rule to the detriment of consumers. Republicans should think twice before taking away consumers’ rights to be heard in a court of law.”
This legislation has the support of 33 Republican cosponsors in the House.
Media:
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House Financial Services Committee Press Release
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Morning Consult
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Washington Examiner
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Consumer Bankers Association (In Favor)
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Heritage Foundation (In Favor)
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National Association of Consumer Bankruptcy Attorneys (Opposed)
Summary by Eric Revell
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