On July 20, 2017, Congressional Republicans began a process to attempt to eliminate a Consumer Financial Protection Bureau rule that stops companies from putting class action bans in their arbitration clauses and makes it easier for consumers to sue banks, credit card firms, payday lenders and other service providers in court.
Republican members of the Senate Banking Committee and the House Financial Services Committee filed resolutions disapproving of the CFPB’s arbitration rule, putting in motion a process under the Congressional Review Act that could see the bureau’s regulation invalidated.
The financial services industry has come out in full force to oppose the CFPB’s regulation, which it says would harm consumers by taking away their ability to have a quick, simple way to settle disputes in a process funded by companies. By making it easier for consumers to sue in court, the CFPB made it less likely that firms will continue to use arbitration to settle disputes, the industry argues.
With Republicans controlling both houses of Congress and the White House, the rule can be overturned by a majority vote in both the House and the Senate under the Congressional Review Act. While the CRA was rarely activated before, congressional Republicans and the Trump administration have so far used it to eliminate 14 rules the Obama administration put in place late in its term.
House Majority Leader Kevin McCarthy, R-Calif., said his chamber would take up the CRA measure next week, and Sen. Tom Cotton, R-Ark., said Wednesday that he hoped the rule could be nullified by mid-August.