By a 51-50 vote, the Senate yesterday voted down a rule by the Consumer Financial Protection Bureau curtailing a common form of dispute resolution used in financial contracts: binding arbitration clauses. Vice President Mike Pence, in his constitutional role as president of the Senate, cast the deciding vote. The Senate vote was under the auspices of the Congressional Review Act, which gives Congress 60 legislative days to stop a new regulation.
CEI experts Ted Frank and Iain Murray praised the Senate vote.
Statement by Ted Frank, director of CEI’s Center for Class Action Fairness
By voting down the Consumer Financial Protection Bureau’s anti-arbitration rule, the Senate today prevented a cash grab that would have transferred wealth from consumers to the pockets of wealthy attorneys. CEI’s attorneys have won over $100 million for class members fighting against class-action abuse, but far too few courts provide the protection for consumers that the law requires. Because of this, it is important for consumers to have the choice that the Senate helped protect today.
Statement by Iain Murray, CEI vice president for strategy
Today’s Senate vote rightly rebukes a regulatory agency that abuses the rulemaking process. The CFPB imposes numerous restrictions on consumer freedom without scrutinizing their negative impact on consumers or heeding objections in public comments submitted to the agency. Congress needs to follow up next by disapproving the CFPB’s rule against small dollar lending, which is even more abusive than the arbitration rule.