Defenders of the CFPB’s Newest Financial Regulation Are Ignoring Crucial Facts

Reason discusses the anti-arbitration rule in regards to the Equifax breach with John Berlau.

In the wake of the Equifax breach, in which hackers stole names, social security numbers, and other personal information for more than 143 million people from the credit scoring agency’s databases, Americans are rightfully more concerned about holding financial institutions accountable for misusing or losing valuable data.

Democrats have now tried to turn the Equifax breach to their political advantage, whipping up a dry-but-important battle over financial regulation into a populist squall.

“Forced arbitration is a tool that big corporations use to silence victims of corporate fraud or corporate abuse,” Sen. Sherrod Brown, D-Ohio, said Tuesday during brief remarks on the Senate floor, invoking the Equifax breach. “Forcing these families to sign away their rights is not only wrong, it’s dangerous.” Similar rhetoric is blaring from television screens in some states, like Maine, where ads funded by Allied Progress Action, a progressive campaign organization, are targeting Republican senators seen a swing votes on the CRA resolution. “Big corporations like Equifax got caught trying to sneak it past you,” the ads say, referring to the arbitration clauses sometimes included in financial services contracts.

Those ads—and the Democratic talking points about the arbitration rule—are flawed in several ways. “If there were a consumer bureau for political ads—not that there should be—this one would be facing some penalties for deception,” says John Berlau, senior fellow at the Competitive Enterprise Institute, a free market think tank opposed to the arbitration rule.

Read the full article at Reason.