Senate's Vote to Repeal CFPB's Arbitration Rule a Positive for Credit Unions
On Oct. 24, the Senate voted 51 to 50 in favor of repealing the Consumer Financial Protection Bureau’s (CFPB) arbitration rule under the Congressional Review Act. A victory for credit unions, this is the latest example of the strength of the CUNA/league’s advocacy efforts.
The CFPB’s rule, which was finalized this past July, has been met with consistent criticism from CUNA and state leagues since April as unnecessary. The rule, which would have restricted arbitration clauses in financial contracts, was another case of the CFPB’s umbrella approach to financial services regulation not making sense for credit unions.
As CUNA Chief Advocacy Officer Ryan Donovan said in a Credit Union Journal op-ed earlier this week, “The movement’s member ownership structure means these institutions tend to pull out all the stops to work with members who may find themselves in a dispute with their credit union in order to come to a solution that is good for all parties.”
This repeal will not only put a stop to the CFPB's current rule, but disallows them from creating a similar rule in the future without congressional action.
“We’re grateful that the Senate, and the House, recognized that the CFPB's arbitration rule did not benefit credit unions members,” said CUNA President/CEO Jim Nussle. “This rule ignored the different size and member-ownership structure of credit unions and instead treated them as akin to abusive Wall Street banks. The CFPB's rule encourages credit union members to act against their own best-interest by engaging in costly class action litigation which depletes the resources of the membership as a whole and instead benefits trial lawyers most. This rule was just the latest example of the one-size-fits-all rulemaking coming from the CFPB and thankfully Congress acted to remedy the situation.”
A signature of approval from President Donald Trump is expected within the coming days.
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