We have talked a lot about Obama’s regulatory tailspin that his administration rushed through at the 11th hour. Congress used the Congressional Review Act to successfully repeal fourteen harmful regulations that made it difficult for small businesses to thrive and tough for people to find jobs.
Our lookout for harmful regulations is not over. This time, the rogue Consumer Financial Protection Bureau is the culprit of a horrible new rule.
A little background: The CFPB is an “independent government agency,” which really means that it is unchecked, unconstitutional, and unaccountable. Authorized by the disastrous Dodd-Frank legislation, the agency is not subject to Congressional appropriations and simply refuses to be transparent.
Even with a new administration, the CFPB has been up to no good. Now, the unchecked agency has promulgated the anti-arbitration rule, which puts wealthy trial lawyers ahead of consumers.
Pre-dispute arbitration is a wonky term for a process in which consumers and companies can resolve disputes without spending the time and money that litigation inevitably brings. However, the rule makes that next to impossible by requiring financial services companies to absorb all the expenses of the arbitration process. That may sound pro-consumer, but it actually just incentivizes companies to avoid it altogether and choose the class-action process—the litigation route.
And whom does the litigation route benefit? Trial lawyers. The CFPB’s own data shows that potential class-action victims receive benefits in fewer than 20 percent of cases. For cases that do settle, the average class-action participant receives an average of only $32, but the lawyers involved receive upwards of $424 million.
No, consumer-friendly this rule is not.
That’s why the House is using the Congressional Review Act to repeal this rule today. That makes this the 15th regulation repealed. The CFPB is simply out of control and House Republicans are working to change that for the American people. The White House also supports this legislation. The House also passed the Financial CHOICE Act in June to rein the agency in. It’s time that the CFPB was stopped from putting special interests above consumers.