CFPB publishes final arbitration rule in Federal Register

On July 19, 2017, the CFPB published its final arbitration rule in the Federal Register. The rule has an effective date of September 18, 2017 and a mandatory compliance date of March 19, 2018.
Under the Congressional Review Act, Congress will have 60 legislative days to override the rule. The rule’s publication is also a trigger for filing a petition with the Federal Stability Oversight Council (FSOC) to set aside the rule. For FSOC to block the rule, an FSOC member must file a petition within 10 days of the date of publication.
Jeff Sovern, of the Consumer Law Blog writes, “Given the opposition of Acting Comptroller of the Currency (and former bank lawyer) Keith Norieka, it would not be surprising, though it would be unfortunate, to see him file such a petition.”
On July 10, Norieka sent a letter to CFPB Director Richard Cordray expressing concerns about the potential impact that the Bureau’s arbitration rule might have on safety and soundness.
On July 12, Cordray responded expressing surprise at Norieka’s concerns stating, “As you may be aware, the issuance of the rule marked the conclusion of a multi-year process that included the Bureau’s completion in March 2015 of an arbitration study that was required by law. The rulemaking process itself spanned more than two years. Throughout that process, the Bureau consulted repeatedly with representatives of the Office of the Comptroller of the Currency . . . to discuss ‘prudential, market, or systemic objectives.” Corday went on to note that no one from the OCC ever raised safety and soundness concerns.
In a July 17 letter to Director Cordray, Acting Comptroller Norieka repeated a previous request for the data used by the Bureau to develop and support its arbitration rule, so the OCC could complete its analysis of the arbitration rule’s impact on the federal banking system.
In his July 18 response to Noreika, Director Cordray questioned how there could be “any plausible basis for [Acting Comptroller Noreika’s] claim that the arbitration rule could adversely affect the safety and soundness of the banking system.” Nevertheless, Director Cordray also wrote that “we are happy to share the data underlying our rulemaking. I understand that our teams are in communication and we are in the process of assembling the data your staff has requested.”
According to a Wall Street Journal report, Norieka is purportedly asking that the rule be delayed because “The OCC should be granted the opportunity to conduct an independent review of the CFPB data to determine the safety and soundness implications of the Final Rule.”
Sovern suggests that this is simply a case of politics and that “Norieka is either hoping to delay the rule until a new CFPB director is in place, or (as the WSJ implies) help congressional Republicans looking to use the Congressional Review Act against the arbitration rule.”
