Federal Spotlight – Senate Votes to Rescind Anti-arbitration Rule

November 2, 2017

The U.S. Senate, in a 51-50 vote last week with Vice President Pence casting the deciding yes vote, repealed a rule issued by the Consumer Financial Protection Bureau (CFPB) that would have allowed individuals to file class action lawsuits against financial institutions. The rule, which the CFPB approved in July, would have banned arbitration clauses from being inserted into contracts between consumers and financial institutions. This would have driven up costs for businesses and consumers alike by enabling expensive, burdensome and often frivolous class-action lawsuits to be used over arbitration or small claims court. The CFPB argues these lawsuits hold banks accountable for their actions. Opponents of the rule propose the CFPB is simply enriching trial lawyers while the costs of these lawsuits are passed on to consumers. President Trump is expected to sign the legislation. Read more from the Wall Street Journal.