2017-10-24 — latimes.com
The Treasury Department on Monday issued a report critical of a pending federal rule that would limit the use of forced arbitration by financial firms, calling it flawed and a giveaway to class-action attorneys.
The report is the latest salvo in an ongoing fight over the regulation, opposed by the finance industry and many Republicans in Congress. The House of Representatives has already voted to scrap the rule, and the Senate has about a month to do the same before a key deadline.
The Consumer Financial Protection Bureau's rule, finalized in July, allows banks to demand that customers submit to arbitration in individual disputes. But the rule prohibits private-arbitration agreements from including a ban on participation in class-action cases.
That study, the report said, found that most consumers get little if any relief from class-action settlements and could get more in private arbitration even if most consumers don't go that route.
The rule also has been criticized by Treasury official Keith Noreika, acting comptroller of the currency, who this summer asked the CFPB to delay implementing the new rule over concerns that it would threaten the health of the nation's biggest banks.
Scott Pearson, a partner at law firm Ballard Spahr who represents financial services firms, said the report could be aimed at pushing the Senate to scrap the rule -- or serve as a justification for terminating CFPB Director Richard Cordray, an Obama appointee.
Sen. Sherrod Brown (D-Ohio), who supports the arbitration rule, said the Treasury report "cherry-picked arguments" and that the CFPB's 2015 arbitration study "demonstrates that hard-working Americans benefit when they get their day in court."
The whole point of allowing class actions is to force financial companies to change abusive practices generally, not to provide the maximum amount of relief to the consumers who actually engage in a complaint and arbitration action (after all, a big part of the problem is it isn't even in most consumer's economic interest to proceed to sue or arbitrate, one-on-one). But, we can see the real reason for resistance in Noreika's comments about "concerns that it would threaten the health of the nation's biggest banks"...
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