On the evening of October 24, with a deciding vote cast by Vice President Mike Pence, the Senate voted to overturn the Consumer Financial Protection Bureau’s (CFPB’s) controversial final rule on arbitration by a vote of 51 to 50. The rule would have allowed Americans to file class-action suits against banks instead of being forced into private arbitration. All but two Republicans voted to repeal the rule, and no Democrats or independents supported the repeal. The House had voted to overturn the rule in July. President Trump is expected to sign the resolution, which stops the rule from taking effect and precludes government agencies from issuing any similar rule in the future.
The IBA has been strongly opposed to the rule since it was proposed in 2015 and has repeatedly lobbied in Washington for its defeat. Most recently, during our Washington Visit last month, the IBA and our banker delegation met with representatives with the CFPB and voiced our concerns. According to a study by the OCC, the proposal would have increased the cost of credit for consumers by approximately 25 percent after factoring in the cost of class-action litigation.