President Donald Trump Signs Repeal of CFPB’s Mandatory Arbitration Rule
11/1/2017 9:30:00 PM
The president’s decision comes despite a personal appeal from CFPB Director Richard Cordray who opposed a congressional vote to overturn the rule using the Congressional Review Act.
President Donald Trump signed the legislation repealing the Consumer Financial Protection Bureau’s mandatory arbitration rule Wednesday, about a week after it passed with a narrow Republican majority vote on the Senate floor.
In a last-minute effort to counter the resolution, on Monday CFPB Director Richard Cordray sent a letter to Trump asking him to uphold the CFPB’s arbitration rule.
But Trump moved forward with the repeal Wednesday, solidifying a significant victory for the credit and collection industry, banks and financial services companies.
“Overturning the CFPB’s harmful regulation is a decisive victory for consumers and our economy,” U.S. Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said after the president signed the legislation. “For far too long, the burden of Washington’s top-down regulations became so severe and so excessive they slowed our economy down and robbed Main Street Americans of opportunities to get ahead.”
Hensarling, who recently announced he will not seek re-election, attended the signing ceremony for the legislation at the White House Wednesday.
U.S. Senate Republicans, with Vice President Mike Pence casting the tie-breaking vote after a 50-50 split, overturned the CFPB’s rule to ban class action waivers in arbitration agreements in contracts for consumer financial products Oct. 24, ACA International previously reported.
“By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB's uninformed and ineffective policy,” according to a statement from The White House.
Cordray acknowledged the opposition in his letter to Trump, according to CNN Money.
"Many have told me I am wasting my time writing this letter—that your mind is made up and that your advisors have already made their intentions clear," he said. "But this rule is all about protecting people who simply want to be able to take action together to right the wrongs done to them."
For months, Cordray defended the rule despite challenges from the Office of the Comptroller of the Currency and U.S. Department of the Treasury, among others, ACA previously reported.
Acting Comptroller of the Currency Keith Noreika also commented on the president’s decision to sign the legislation.
“The action is a victory for consumers and small and midsize banks across the country because it stops a rule that likely would have significantly increased the cost of credit for hardworking Americans and taken away a valuable tool for resolving differences among banks and their customers,” Noreika said. “The action today preserves a choice for consumers who can choose among financial providers that offer services with arbitration clauses and those that do not. The rule would have harmed consumers even as it provided no benefit in deterring bank misbehavior or preventing customer abuse. It is a new day in Washington when policymakers are actually concerned about the consequences that regulations have on working Americans. I applaud Congress and the president for vacating the rule.”
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