House Overturns CFPB Regulation That Made It Easier for Consumers to Sue Financial Institutions
Yesterday, the House voted to overturn a new regulation from the Consumer Financial Protection Bureau. The rule, approved just two weeks ago, prevented banks and credit card companies from exclusively using arbitration clauses in their account agreements, thereby making it easier for consumers to sue financial institutions.
The regulation was denied with a 231-190 vote. It will now face a new round of voting in the Senate, in which it will most likely be denied once again. Republican members of the Senate have already created an alternative bill that reverses the CFPB’s rule.
The “anti-arbitration” rule has faced a great deal of scrutiny this month. The CFPB issued the regulation to protect consumers from having to face big banks and credit card companies alone. Many politicians believe that eliminating arbitration clauses will result in “excessive litigation and frivolous lawsuits” that could easily be handled outside of court.
In a statement from the White House, the Administration said the increased costs from these lawsuits would be passed on to the consumer, not the financial institutions. Furthermore, the CFPB’s rule would “harm consumers by denying them the full benefits and efficiencies of arbitration.”