Center for Freedom and Prosperity
For Immediate Release
Monday, July 24, 2017
CF&P-Led Coalition Calls for Reversal of CFPB’s Anti-Arbitration Rule
(Washington, D.C., Monday, July 24, 2017) A coalition of 29 taxpayer protection and grassroots organizations led by the Center for Freedom and Prosperity sent a letter today urging Congress to invoke the Congressional Review Act to reverse a new CFPB rule preventing financial services companies from using arbitration to resolve customer disputes.
Link to the coalition letter pdf: http://www.freedomandprosperity.org/files/2017-07-24_CFPB_binding_arb_coalition_ltr.pdf
The letter argues that CFPB’s own report offers no solid justification for a rule prohibiting use of binding arbitration, and instead demonstrates that the alternative of class-action lawsuits work only for lawyers, not consumers. The legal uncertainty surrounding CFPB should also be resolved before any more costly, industry-upending regulations are allowed to be promulgated.
Excerpt from the letter:
We, the following free-market, limited-government, and liberty-oriented organizations, ask you to use the Congressional Review Act (CRA) to reverse recently published rules promulgated by the Consumer Financial Protection Bureau (CFPB) ending long-held policy allowing for binding arbitration contracts. Failure to reverse this regulation will result in an avalanche of class-action lawsuits that will hurt jobs and do little to benefit consumers.
The CFPB’s arbitration rule has been described as “Christmas in July” for America’s trial lawyers – and rightly so. According to the CFPB’s own finding, the rule will cost consumers billions of dollars and unleash over 6,000 class action lawsuits every five years. This rule is an obstacle to the efforts to right America’s fiscal ship and create jobs and prosperity for the American people.
Signers of the letter and other experts offered the following comments on the rule:
CF&P President Andrew Quinlan commented, “The misnamed Consumer Financial Protection Bureau is putting the interests of trial lawyers ahead of consumers. Congress can and should protect the American people from its latest overreach by acting quickly to reverse this rule.”
Veronique de Rugy, Senior Research Fellow at the Mercatus Center, said, “The CFPB is the definition of an out-of-control bureaucracy. It failed to identify a need for interference in the market and yet acted anyway. It’s somewhat ironic that it is now up to Congress to protect consumers from the CFPB.”
“Bureaucrats should not prohibit contractual agreements between consenting adults,” offered Cato Institute Senior Fellow Dan Mitchell.
“The unchecked power of the Consumer Financial Protection Bureau (CFPB) poses a threat to the very people it’s intended to help,” said Chrissy Harbin, Americans for Prosperity Vice President of External Affairs. “The CFPB’s recent rules not allowing for binding arbitration contracts will create an environment ripe for America’s trial lawyers to file class-action lawsuits that will undermine job creation and economic growth. AFP is proud to stand with other free-market organizations calling on the CFPB to use the Congressional Review Act to reverse this harmful rule.”
“Arbitration terrifies class action lawyers because it greatly reduces their ability to wring quick settlements or engage in attrition by litigation. It remains an invaluable and under-appreciated tool in our hyper-litigious society, and one for which Americans should remain ready to fight,” said Center for Individual Freedom President Jeffrey Mazzella.
Representatives of the following 29 organizations signed the coalition letter:
Center for Freedom and Prosperity; Americans for Tax Reform; Taxpayers Protection Alliance; American Commitment; Americans for Prosperity; Institute for Liberty; R Street Institute; Competitive Enterprise Institute; National Taxpayers Union; American Conservative Union; Frontiers of Freedom; Log Cabin Republicans; American Consumer Institute; 60 Plus Association; FreedomWorks; Less Government; Americans for Limited Government; Center for Individual Freedom; Small Business & Entrepreneurship Council; Campaign for Liberty; Council for Citizens Against Government Waste; Market Institute; Digital Liberty; Independent Women’s Forum; Independent Women’s Voice; National Black Chamber of Commerce; Institute for Policy Innovation; Hispanic Leadership Fund; and Consumer Action for a Strong Economy