Vote Explanation for H.J.Res.111 — Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection relating to “Arbitration Agreements”
Republicans are once again using the Congressional Review Act (CRA) to roll back a critical safeguard enacted by the Consumer Financial Protection Bureau (CFPB) to protect Americans from predatory financial institutions. The CRA was first used in 1996 by former Speaker Newt Gingrich, and the law gives Congress 60 legislative days to overturn a final rule. Under the CRA, a joint disapproval resolution must pass both the House and Senate and be signed into law by the President.
Not only does an action like this overturn years of work by federal agencies, but the CRA also prohibits agencies from ever submitting a substantially similar rule again. Regulatory reform is needed, but the CRA is a dangerous way to do it. Democrats and Republicans should come together to address over-regulation in a thoughtful and collaborative way that protects the American public, not big business.
That is why I opposed H.J.Res. 111, which would repeal a CFPB rule, finalized in July 2017, requiring certain companies that sell consumer financial products and services from using pre-dispute arbitration agreements to block class actions in court.
Many contracts for consumer financial products and services include a clause that forces the parties to resolve future disputes through arbitration, a dispute resolution process in which a third party makes a final binding decision instead of in court. This is a common feature in contracts offered by companies that provide credit cards, checking accounts, debt-collection services, and automobile leasing.
The Dodd-Frank financial regulatory law required the CFPB to study arbitration agreements and authorized the bureau to limit how companies use them. The CFPB’s study, issued in March 2015, included the following findings:
- Few consumers seek individual relief through arbitration or federal courts.
- Credit card issuers representing 53 percent of outstanding credit card loans and banks representing 44.4 percent of insured deposits used binding arbitration clauses.
- About 160 million class action members were eligible for relief in the five-year period covered by the study.
Consequently, in July of this year, the CFPB issued a rule that bars pre-dispute arbitration clauses that block class action lawsuits. While companies could still include arbitration clauses in their contracts, the clauses couldn’t be used to stop consumers from joining a class action.
I support the CFPB rule, which ensures that people who are harmed together by predatory financial practices, can take action together.