Trump repeals consumer arbitration rule, wins banker praise
President Trump on Wednesday signed a repeal of the Consumer Financial Protection Bureau’s rule on forced arbitration, winning praise from banking and business groups.
Trump approved the resolution to repeal the CFPB rule, meant to prevent banks and credit card companies from blocking customers from joining class-action lawsuits against them, in a private Oval Office signing.
The House passed a resolution to repeal the rule in July, which passed the Senate two weeks ago.
Trump was joined by the heads of several banking lobbying groups that opposed the CFPB rule, contending it would kill cheaper options for consumers while enriching trial lawyers.
The chiefs of the Consumer Bankers Association, Independent Community Bankers of America, National Association of Federally-Insured Credit Unions and several other groups attended the signing.
The arbitration rule repeal is a major victory for finance and business groups, which promised to fight the measure soon after it was released in July. Critics say the rule went too far in restricting arbitration based on a CFPB study they consider flawed and misleading.
“Arbitration is a well-established and tested process that offers better results for consumers and helps avoid frivolous class-action suits,” said Independent Community Bankers of America President Camden Fine.
“[Independent Community Bankers of America] thanks the president for swiftly signing this measure into law because it preserves community banks’ contractual right to pursue fair and timely resolution through arbitration and avoid prohibitively expensive and protracted litigation.”
Richard Hunt, Consumer Bankers Association president and CEO, said the arbitration rule “was about protecting trial lawyers and their wallets,” praising Trump and Congress for ensuring “consumers have the necessary tools to receive relief without going through drawn-out class action proceedings.”
Dan Berger, National Association of Federally-Insured Credit Unions president and CEO, said the group “was honored to have been invited to the White House to watch the undoing of a rule that likely would have had negative effects on the credit union industry.”
Democrats and the CFPB criticized Trump, claiming he sides with banks over consumers. They’ve long called for action on forced arbitration, which they say denies fraud victims basic legal rights, and the CFPB rule was the most ambitious effort to regulate the practice.
CFPB Director Richard Cordray said “in signing this resolution, the president signed away consumers’ right to their day in court.”
“This action tips the scales of justice in favor of Wall Street banks less than 10 years after they caused the financial crisis,” said Cordray, who asked Trump on Monday to spare the rule. “By blocking our arbitration rule, this action makes it nearly impossible for ordinary people to stand up for themselves against corporate giants like Wells Fargo and Equifax.
“Now more than ever, it is critical that the Consumer Bureau remain a strong check on financial companies,” he said.
Better Markets, a nonprofit aligned with the CFPB, said, “Today, the Trump administration and Republicans in Congress have made it clear, they are on the side of Wall Street banks not Main Street consumers.”
Rep. Tim Ryan (D-Ohio) called Trump’s repeal “a disgrace,” tweeting that “If [Trump] cared about working people he’d veto this swampy legislation.”