According to a report in today’s Politico Pro (subscription required), some conservatives are pushing to preserve the CFPB’s anti-arbitration rule:
A poll released today by the American Future Fund, a super PAC established to support Mitt Romney’s bid for president, shows broad support for the arbitration ban in states where moderate Republicans could decide the future of the rule.
…”The message for Republican senators is be very careful,” said Nick Ryan, founder of American Future Fund. “The people are against what the Republican majority did in the House, and they’re against it by pretty clear majorities.”
It’s not hard to make a poll say whatever the pollster wants, and they are clearly trying to make this into an issue of Big Banks vs The Little Guy. But it could just as easily, and more accurately, be described as an issue of Big Trial Lawyers vs The Little Guy. I’m sure if the polling question framed the issue as a handout to trial lawyers, who are the only group that benefits from the vast majority of class-action suits, the results would have been drastically different.
Nor should that be a hard case to make. CEI’s Ted Frank explains in today’s Wall Street Journal how the CFPB used faulty data to overstate the benefit of class action lawsuits:
The agency justifies its rule by claiming it found that 79% of money paid in class-action settlements goes to consumers. The statistic is bogus. Lawyers publicize the handful of settlements in which cash actually goes to consumers but hide the overwhelming majority of settlement results from public view.
A Florida federal district court, for example, has in recent years approved several settlements with banks concerning mortgage-insurance practices. Lawyers collected tens of millions of dollars. But the claims process for mortgage-holder class members was so arduous that consumers were certain to receive only a fraction of that. Class members, who have no say over who is appointed as their attorney, objected repeatedly. The court refused to consider how much class members would actually receive in the settlements—or even require its disclosure.
How did the CFPB study treat settlements like these, in which there is no public information about how much the class received? It assumed every class member got paid, then calculated its ratio based on that fictional “gross relief” number. The agency also calculated a “net relief” ratio based on actual payments—but that ratio ignored all settlements in which the actual payments were not disclosed, as well as those in which the class received no cash at all and the attorneys got 100% of the proceeds.
Republican Senators shouldn’t worry too much about some push polls. It’s not an issue that is likely to move the electoral needle, and if they bother to make the case at all they should be able to sell it as a clear example of regulatory overreach in order to benefit a major constituency of the Democratic Party. After all, the CPFB has practically served as an organ of the Democratic Party since its creation, and it continues to operate with an unconstitutional degree of autonomy.
The CF&P led coalition of 29 organizations, major conservative and free market groups, should provide sufficient courage for the politicians who need it to do the right thing.