Update (August 28, 2017): A lot has happened since our original post on the CFPB’s arbitration rule, and more is on the way. The CFPB’s arbitration rule is definitely alive and breathing, for the time being:
- The CFPB published its long-awaited arbitration rule on July 19, which, as discussed in more depth below, regulates arbitration agreements in contracts for certain consumer financial products or services (such as contracts involving deposit and savings accounts, credit cards, student loans, automobile leases, etc.).
- In response – and only six (6) days after the rule’s publication – the House of Representatives voted to disapprove the CFPB’s rule, using its authority under the Congressional Review Act. The House’s vote to repeal passed by a 231-190 vote.
- The vote to stop the CFPB’s rule now moves its way to the Senate. While a resolution to disapprove the CFPB’s rule has been introduced in the Senate, it is not expected that a vote will occur until at least September 5 when the Senate returns from recess. Under the Congressional Review Act, the Senate has 60 days from the CFPB rule’s publication date (July 19, 2017) to pass its disapproval resolution.
- If the Senate also votes to disapprove the CFPB’s rule, the fate of the CFPB’s rule would lie in the hands of President Trump. Interestingly, on July 24, the White House issued a statement indicating that the Administration strongly supports disapproval of the CFPB’s rule. In fact, the Statement indicated that “if [the House’s disapproval resolution] were presented to the President in its current form, his advisors would recommend that he sign it into law.” Frankly, if the resolution to disapprove the CFPB’s arbitration rule makes it to President Trump’s desk, it seems likely that he will side with both chambers of Congress and also disapprove the CFPB’s arbitration rule.
Financial institutions should keep an eye on the status of the CFPB’s arbitration rule and act accordingly when the dust settles. More to come. Continue Reading