A congressional repeal of the rule banning use of arbitration agreements for most financial products was formally signed into law by President Donald Trump Wednesday, following a close vote in the Senate and a personal appeal by Consumer Financial Protection Bureau (CFPB) Director Richard Cordray to Trump to veto the legislation.
Earlier in the week, Cordray wrote to Trump in a personal appeal to veto the repeal of the CFPB rule, which would have allowed consumers to join in class actions over disputes about financial products, including credit cards and bank accounts. The Senate on Oct. 24 passed the repeal resolution by a one-vote margin (51-50), cast by Vice President Mike Pence; the House passed the resolution earlier this year. The repeal was passed under the auspices of the Congressional Review Act (CRA).
“I think you really don’t like to see American families, including veterans and service members, get cheated out of their hard-earned money and be left helpless to fight back,” Cordray wrote. “I know that some have made elaborate arguments to pretend like that is not what is happening, ” he wrote. “But you are a smart man, and I think we both know what is really happening here.”
Despite Cordray’s plea, Trump signed the repeal bill; the White House issued no statement about his action.
However, Acting Comptroller of the Currency Keith Noreika – who publicly challenged the CFPB’s data supporting the rule – issued a statement, saying he applauded Congress and the president for vacating the rule. “The rule would have harmed consumers even as it provided no benefit in deterring bank misbehavior or preventing customer abuse,” Noreika said, noting that the regulation likely would have significantly increased the cost of credit for hardworking Americans and “taken away a valuable tool for resolving differences among banks and their customers.”
Under the CRA, once a rule is repealed it may not be reissued in substantially the same form – nor may a new rule that is substantially the same be issued – “unless the reissued or new rule is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,” according to the statute, passed in 1996.