There’s good news and bad news for the Consumer Financial Protection Bureau’s new arbitration rule.
On the positive side, the Office of the Comptroller of the Currency doesn’t plan to stand in the way of the rule being implemented, as the OCC recently threatened to do.
On the other hand, the OCC isn’t planning to intervene in the arbitration rule situation because Congress is currently in the process of repealing the rule.
On Monday, Keith Noreika, the acting Comptroller of the Currency, said that the OCC will not petition the Financial Stability Oversight Council to delay the implementation of the arbitration rule due to Republicans’ efforts in both houses of Congress to overturn the rule using the Congressional Review Act.
Under the Congressional Review Act, Congress may overturn a broad range of regulatory rules issued by federal agencies by enacting a joint resolution of disapproval within 60 days of the rules being announced.
Last week, the House of Representatives passed a “resolution of disapproval” to revoke the CFPB’s arbitration rule. A similar effort is currently underway in the Senate as well.
According to Noreika, due to those Congressional efforts, the OCC will not ask the FSOC to delay the rule, but the OCC still has significant doubts about the rule, which deals with consumer financial products like credit cards and bank accounts that contain arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing.
“The Office of the Comptroller of the Currency has only begun its review of the CFPB’s data and analysis underlying that agency’s Final Rule,” Noreika said in a statement. “Nothing so far diminishes my concerns that the rule may adversely affect the institutions within the federal banking system and their customers.”
In his statement, Noreika said that the CFPB rule “prevents banks from using an effective risk mitigation tool and will eliminate one option consumers have to resolve their concerns without the cost and delay of litigation.”
Additionally, Noreika said that the CFPB rule could have the opposite effect of its desired intent.
“Ultimately, the rule may have unintended consequences for banking customers in the form of decreased availability of products and services, increased related costs, fewer options to remedy consumer concerns, and delayed resolution of consumer issues,” Noreika said. “The rule may turn out to be the proverbial straw on the camel’s back.”
Noreika also said that another reason for the OCC not asking the FSOC to delay the arbitration rule is that the CFPB has not provided the OCC with enough information about its reasoning for publishing the rule.
“It is important that the OCC economists take the time necessary to conduct their independent review of the data and analysis used to support and develop the Final Rule,” Noreika said. “Unfortunately, since the CFPB published the rule in the Federal Register prior to providing its data for our analysis and we have requested additional data in order to conduct a thorough review, the OCC cannot complete our thorough review in the limited time before a petition must be filed with the Financial Stability Oversight Council.”
In conclusion, Noreika said that he hopes that the Senate will join the House in voting to repeal the CFPB rule.
“I hope Congress will act on this opportunity to preserve effective alternatives for consumers to resolve their disputes without lengthy and costly litigation and to reduce the ‘piling on’ of legal and regulatory burden,” Noreika concluded.
