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Wednesday, July 26, 2017

House Votes to Overturn CFPB's Arbitration Rule

House lawmakers voted to overturn the CFPB’s controversial final arbitration rule by a vote of 231 to 190, exercising their authority under the Congressional Review Act to reject new federal regulations within 60 legislative days of publication in the Federal Register.

Leading the effort in the House were House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Rep. Keith Rothfus (R-Pa.), and other members of the House Financial Services Committee. A similar measure has been introduced in the Senate by Banking Committee Chairman Mike Crapo (R-Idaho).

The rule  which was finalized earlier this month  drastically limits the use of mandatory arbitration clauses for financial products and services, which are frequently used by banks of all sizes to manage the unpredictable costs of class action lawsuits and ensure prompt resolution of disputes. ABA previously pointed out that this could impose a significant burden on customers whose claims cannot be resolved through class actions, as it would require them to go to court for minor, non-systemic disputes.

ABA President and CEO Rob Nichols welcomed the House's action, calling it a win for consumers. 

In class-action lawsuits, the spoils go overwhelmingly  and sometimes exclusively  to a small group of highly motivated trial lawyers who specialize in filing a large volume of often frivolous litigation. (Overturning the rule) is critical to ensuring the bureau doesn’t provide trial lawyers with a regulatory windfall at consumers’ expense. 
Read ABA's statement

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