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A Senate Republican has circulated a resolution to nullify the Consumer Financial Protection Bureau’s arbitration rule, one day after the rule was adopted by the bureau.“The Bureau’s new rule on arbitration clauses ignores the consumer benefits of arbitration and treats Arkansans like helpless children, incapable of making business decisions in their own best interests,” Sen. Tom Cotton (R-Ark.) said in a news release July 11. “This morning I’ve started the process of rescinding this rule using the Congressional Review Act.”
The rule restricts financial companies from using mandatory arbitration clauses to head off class-action lawsuits.
Republican lawmakers have already used the CRA to roll back more than a dozen rules adopted by Obama administration regulators, but this would be the first attempt to undo a rule adopted while President Donald Trump has been in office. CFPB Director Richard Cordray is an Obama appointee and holdover from the previous administration.
A CRA resolution to knock out a rule requires majorities in both houses of Congress, with only a simple majority needed in the Senate if a vote takes places within 60 days of the rule’s publication in the Federal Register.
Cotton is likely to attract Republican backers for the CRA effort and plans to introduce a disapproval resolution. It is uncertain whether enough moderate Republicans, like Sens. Susan Collins (Maine) and Dean Heller (Nev.), would sign on for it to pass.
“The CFPB has gone rogue again, abusing its power in a particularly harmful way,” Cotton said, echoing a familiar refrain from Republican lawmakers who say the agency exceeds its authority and ignores congressional directives regarding its powers.
On the House side, Financial Services Committee Chairman Jeb Hensarling (R-Texas) endorsed using the CRA to wipe out the rule. The American Bankers Association backed a CRA effort, and the U.S. Chamber of Commerce encouraged Congress’ "exploring” of the CRA.
Consumer groups and Democratic lawmakers, however, have cheered the CFPB’s rule.
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