The Vice President has cast a tie-breaking vote in the United States Senate to rescind a new Consumer Financial Protection Bureau (“CFPB”) rule that prohibits most financial service providers such as banks and credit card issuers from requiring consumers to sign mandatory arbitration agreements barring class-action lawsuits. The final CFPB arbitration rule was issued on July 19th and Republican lawmakers immediately began working to kill it. On July 25th, the House of Representatives invoked the Congressional Review Act in order to repeal the measure prior to its scheduled implementation this month. In response to House Joint Resolution 111, CFPB Director Richard Cordray published an opinion piece in the New York Times. His op-ed titled “Let Consumers Sue Companies,” addressed what Director Cordray believes are widespread misconceptions about the rule. The President is reportedly expected to sign House Joint Resolution 111 once it reaches his desk.
Because the Congressional Review Act states a federal agency may not issue a new rule that is substantially the same as a disapproved rule without specific authorization from Congress, it will be tough for the CFPB to adopt new regulations regarding the issue. According to the Act:
(1) A rule shall not take effect (or continue), if the Congress enacts a joint resolution of disapproval, described under section 802, of the rule.
(2) A rule that does not take effect (or does not continue) under paragraph (1) may not be reissued in substantially the same form, and a new rule that is substantially the same as such a rule may not be issued, unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule.
Despite this, the Congressional Review Act’s language has not yet been interpreted by any court.
Last month, the United States Chamber of Commerce and a coalition of corporate business lobbying groups filed a lawsuit in the Northern District of Texas seeking to enjoin CFPB from enforcing the new arbitration rule. That case will be rendered moot once the President signs House Joint Resolution 111.
H/T to Mark Kantor.
Photo credit: Foter.com
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