Consumer Bureau Loses Fight to Allow More Class-Action Suits
- 7 years ago
Consumer Bureau Loses Fight to Allow More Class-Action Suits
The consumer bureau has unusually broad authority —
and autonomy from both the White House and Congress — to enforce existing federal laws and write new regulations, like the arbitration rule.
This week, the department weighed in directly on the arbitration rule, warning
that the regulation could unleash frivolous lawsuits, costing financial firms an estimated $500 million in legal fees alone.
For decades, credit card companies and banks have inserted arbitration clauses into the fine print of financial contracts to circumvent the courts
and bar people from pooling their resources in class-action lawsuits.
He also expressed surprise at the report, noting that during his agency’s work
on arbitration, the Treasury “raised no issues or concerns with the bureau.”
The friction is intensifying as Mr. Cordray’s tenure at the bureau is ending.
Senate Republicans voted on Tuesday to strike down a sweeping new rule
that would have allowed millions of Americans to band together in class-action lawsuits against financial institutions.
In the weeks leading up to the vote, Senator Lindsey Graham, Republican of South Carolina, who sponsored legislation
to protect military members from being forced into arbitration, said he would not support a repeal of the rule.
The consumer bureau has unusually broad authority —
and autonomy from both the White House and Congress — to enforce existing federal laws and write new regulations, like the arbitration rule.
This week, the department weighed in directly on the arbitration rule, warning
that the regulation could unleash frivolous lawsuits, costing financial firms an estimated $500 million in legal fees alone.
For decades, credit card companies and banks have inserted arbitration clauses into the fine print of financial contracts to circumvent the courts
and bar people from pooling their resources in class-action lawsuits.
He also expressed surprise at the report, noting that during his agency’s work
on arbitration, the Treasury “raised no issues or concerns with the bureau.”
The friction is intensifying as Mr. Cordray’s tenure at the bureau is ending.
Senate Republicans voted on Tuesday to strike down a sweeping new rule
that would have allowed millions of Americans to band together in class-action lawsuits against financial institutions.
In the weeks leading up to the vote, Senator Lindsey Graham, Republican of South Carolina, who sponsored legislation
to protect military members from being forced into arbitration, said he would not support a repeal of the rule.