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October 25, 2017

Senate clears repeal of CFPB arbitration rule

Voting 51-50, with the tie-breaking vote cast by Vice President Mike Pence, the Senate last night passed a resolution expressing disapproval of the CFPB's final arbitration rule, overturning the rule. This resolution, which passed the House in July, now awaits the president's signature.

"NAFCU appreciates the Senate taking up this vote in a timely manner," said NAFCU President and CEO Dan Berger. "While NAFCU strongly supports consumer protections, credit unions should not have been included in this rulemaking as they are not the bad actors the rule is meant to target. Credit unions should also have access to various forms of dispute resolution, but this rule, as written, could have led to a rise in frivolous lawsuits."

Under the Congressional Review Act, legislators can vote to overrule new federal regulations with a joint resolution of disapproval within 60 legislative days after regulators have submitted the rule to Congress. The Senate had only a few weeks left to vote on the resolution. The rule technically went into effect Sept. 18.

Released in final form in July, the CFPB's arbitration rule would have prohibited the use of arbitration agreements for the purpose of limiting access to class action litigation. In its comment letter regarding the rule, NAFCU argued that the conclusions derived from the CFPB's final arbitration study were unfounded and did not support the proposal, and that the rule would have several unintended consequences for credit unions and their members, including increased costs.

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