The House on Tuesday took the first step toward nullifying the CFPB’s arbitration rule, approving a resolution that would void the regulation.
Voting 231-190, the House approved the resolution under the Congressional Review Act. Only one Republican opposed the resolution, while no Democrat voted for it.
The recently published CFPB rule prohibits financial institutions from using arbitration agreements to keep consumers from being part of a class action suit.
Immediately after its release, congressional Republicans announced their intentions to try to nullify the rule.
In Tuesday’s debate, House Financial Services Chairman Jeb Hensarling (R-Texas), a frequent CFPB critic called the agency “the swampiest” of bureaucracies.
He said that CFPB Director Richard Cordray has forged an “unholy alliance” with trial lawyers—a group that Hensarling called one of the Democratic party’s favorite special interest groups.
He added that Cordray “rushed” the rule because he intends to leave the bureau to run for political office.
Cordray, a former Ohio Attorney General, is reportedly considering a race for the Democratic nomination for governor in his home state.
Hensarling said that despite bureau claims, the rule will hurt consumers.
House Financial Services ranking Democrat Maxine Waters of California said that the effort is just the latest attempt to cut the agency off at the knees.
She said that requiring consumers to submit to arbitration puts them at the mercy of arbiters selected by industry.
House Democratic Leader Nancy Pelosi of California was blunt in her criticism of Republicans.
“Every chance they get they stack the deck against American working people,” she said during the floor debate.
The resolution now goes to the Senate, which is likely to consider it in September.
Senate Banking Committee ranking Democrat Sherrod Brown of Ohio vowed to fight the resolution when it reaches the Senate.
“It’s unconscionable that members of Congress would work to undermine the rights of consumers to have their day in court when they’re cheated by banks and payday lenders,” said Brown.
But CUNA President/CEO Jim Nussle praised the House vote.
“Credit unions frequently work with members to provide refunds, work out payment plans, and find other solutions to resolve a dispute,” Nussle said. “In its final rule, the CFPB declined to recognize the unique size and structure of credit unions in the rule or the harm that class action litigation can cause to credit unions and their members.”
