Today, AFSA joined a coalition letter urging the CFPB to deny the recent Petition for Rulemaking that would establish regulation banning pre-dispute arbitration provisions in contracts for consumer financial services. AFSA opposes new CFPB rulemaking in this space because arbitration reduces transaction costs and enables fair, speedy, and efficient dispute resolution, thereby providing significant advantages to consumers, businesses, and the public at large. The letter highlights five overarching reasons why the Bureau should deny the Petition.
- The Congressional Review Act (“CRA”) bars the proposed rule. In 2017 Congress disapproved of previous anti-arbitration rulemaking and given that the proposed rule is “substantially the same,” it is invalid.
- The CFPB lacks the statutory authority to promulgate Petitioners’ proposed rule. Section 1028 of the Dodd-Frank Act requires the CFPB to conduct a study before attempting to regulate pre-dispute arbitration, and the CFPB must demonstrate that any regulation that it proposes is “consistent with the study,” in addition to demonstrating that the regulation is “in the public interest and for the protection of consumers.” However, this proposed rule would skip this step, and instead rely on an outdated 2015 study.
- The proposal also runs afoul of the Federal Arbitration Act (FAA) itself. The proposal rests on an impermissibly hostile view of arbitration that contradicts the FAA and the Supreme Court’s recognition “that the FAA was designed to promote arbitration” and that the FAA mandates placing “arbitration agreements on equal footing with all other contracts.”
- The Administrative Procedure Act bars Petitioners’ proposal, which would result in arbitrary, capricious, and irrational agency action. Petitioners’ proposal is based on the demonstrably false premises that arbitration harms consumers and that the use of arbitration to resolve disputes makes companies more likely to violate federal laws.
- The CFPB lacks the authority to promulgate Petitioners’ proposed rule because its funding structure is unconstitutional, as the Fifth Circuit recently held in Community Financial Services Association of America, Limited v. Consumer Financial Protection Bureau.
Today, AFSA joined a coalition letter urging the CFPB to deny the recent Petition for Rulemaking that would establish regulation banning pre-dispute arbitration provisions in contracts for consumer financial services. AFSA opposes new… Read the rest
This week Assistant Secretary for Financial Institutions Policy, Graham Steele chaired a convening in the Treasury Cash Room. Civil rights organizations, consumer advocates, and research organizations discussed financial inclusion… Read the rest
American Financial Services Association (AFSA) has submitted comments on the Consumer Financial Protection Bureau’s (CFPB) recent action in the Fair Credit Reporting Act (FCRA) space. The letter addresses several proposed changes in… Read the rest
There has been a lot of talk recently in Washington about the appropriations process. And while it may not be as catchy as “I’m just a bill …” understanding the appropriations process is just as important and entertaining as other “Schoolhouse… Read the rest
Last week, the Senate Banking Committee held a hearing that AFSA attended and to which we submitted a letter for the record. AFSA’s main goal was to ensure that senators did not promote an extension of rate caps or an expansion of the Military … Read the rest
Today, the U.S. Senate Banking, Housing and Urban Affairs Committee held a hearing on financial protections for servicemembers and their families. In advance of the hearing, AFSA sent a letter to Chairman Sherrod Brown (D-OH) and Ranking… Read the rest
Last week, AFSA joined many other trade associations representing a vast array of financial institutions, in a letter to the Consumer Financial Protection Bureau (CFPB) requesting an extension of its comment period on the Dodd-Frank Act… Read the rest
The featured Business Partner for the month of November is Flagstar Bank.
Flagstar Bank is a leading regional bank headquartered in NY with over $100 billion in assets and a robust Corporate Banking Division. Within Corporate Banking, we … Read the rest
Our latest white paper is now available. This month’s white paper takes a deeper look into debt settlement companies.
Debt settlement companies promise to reduce consumer debt significantly, but they charge high fees and may not disclose… Read the rest
It was good to see new Speaker of the House of Representatives, Rep. Mike Johnson (R-LA), move quickly to get the chamber refocused on taking up the peoples’ business.
While the past several weeks created some uncertainty, it also focused attention… Read the rest
