As legislation advances to undo the Consumer Financial Protection Bureau s new anti-arbitration rule, a banking regulator appointed by President Donald Trump on Monday passed up pursuing an alternative path to erasing the Obama-era agency s plan to ban contract terms that prohibit banking and finance consumers from filing class actions.
Even as he declined to mount such a challenge through the Financial Stability Oversight Council a panel of top banking regulators created under the Dodd-Frank Act Acting Comptroller of Currency Keith Noreika delivered a parting shot against the rule and endorsed Republican lawmakers ongoing effort to nullify it through the Congressional Review Act. Noreika had stirred up speculation of an FSOC challenge after raising concerns that the arbitration rule could threaten the safety and soundness of the financial system a notion CFPB Director Richard Cordray stiffly rejected in a string of correspondence between the two agency chiefs.
Given that Congress is considering use of the Congressional Review Act to overturn the CFPB s Final Rule, I will not petition the FSOC to stay the effective date of the rule, Noreika said in a prepared statement Monday, referring to a legislative tool lawmakers have used more than a dozen times this year to repeal rules enacted in the final months of the Obama administration. I hope Congress will act on this opportunity to preserve effective alternatives for consumers to resolve their disputes without lengthy and costly litigation and to reduce the piling on of legal and regulatory burden that I discussed in my testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, on June 22, 2017.
Last week, the House voted along party lines to erase the arbitration rule, putting the fate of the controversial regulation in the U.S. Senate s hands. If a rule is undone through the Congressional Review Act, the agency is barred from pursuing a substantially similar regulation without new legislative authorization.
Noreika s statement came a day after Corey Lewandowski, Trump s former campaign manager, called for the firing of CFPB Director Richard Cordray and referenced the arbitration rule, inaccurately stating that it would cause a "trillion dollars of arbitration that the government is going to have to go through." (Far from leading to more arbitration, the U.S. Chamber of Commerce and other opponents of the rule have argued that it would effectively force companies to drop what they praise a faster, cheaper form of dispute resolution for consumers.)