Economy

Republicans moving to repeal financial rule opposed by banks

Republicans moving to repeal financial rule opposed by banks”

"In moving forward with the rule, the CFPB chose to ignore the results of its own study-which found that consumers fare far better in arbitration-and instead promote class action lawsuits created to benefit trial lawyers at consumers' expense", said Rob Nichols, ABA president and CEO, in a statement.

When he introduced the bill, Cordray told reporters he knew that Republicans in Congress could repeal the rule but insisted it was needed to protect consumers.

The specific issue involves mandatory arbitration clauses in contracts between consumers and financial institutions.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that "as a matter of principle, policy and process, this anti-consumer rule should be thoroughly rejected" after its release.

GOP lawmakers described the rule as a bad deal for consumers but a big win for trial lawyers.

Cordray, a former OH attorney general rumored to be pondering a run for OH governor, said mandatory arbitration clauses force consumers to either give up their complaints of wrongdoing "or go it alone, usually over relatively small amounts that may not be worth pursuing on one's own".

"Forced arbitration gives financial services providers a free pass to get away with abuse", said House Minority leader Nancy Pelosi, California Democrat. "It sadly reflects a Republican party that works relentlessly to empower Wall Street and rig the system against consumers".

"The CFPB's new rule restores the rights of consumers who have been treated unfairly to join with others and seek the relief they deserve in court", he said.

The rule would also require financial institutions to submit to the CFPB redacted copies of arbitration-related records concerning the covered consumer financial products or services, including the initial claim and any counterclaim, the arbitration agreement, and any arbitration award, within 60 days of the date that the record was filed with the arbitrator, arbitral administrator, or court.

Despite the bureau's authority to make financial regulations, Congress can always nullify any new agency rule within a certain number of days through the Congressional Review Act.

The numbers are likely on their side, just as they were earlier this year when Republicans led efforts to upend 14 Obama-era rules. "Repealing the arbitration rule would keep this traditional legal pathway blocked, protecting banks and lenders at the expense of consumers". Before this year, CRA had been successfully used only once, in 2001, to overturn a Clinton-era rule on ergonomic standards.



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