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CFPB courts even more controversy with arbitration rule

Joe Mont | July 18, 2017

One of the most controversial rules proposed by the Consumer Financial Protection Bureau—banning companies from using mandatory arbitration clauses—is now final.

Think of it as an act of defiance as much as a new rule. Jeb Hensarling, the Texas Republican who heads the House Financial Services Committee, has gone so far as to threaten CFPB Director Richard Cordray with Congressional contempt charges if he moved forward with it.

The rule is also destined to face repeal under the Congressional Review Act, and it comes amid growing efforts to unseat Cordray and defang the Bureau by chipping away at the independency bestowed upon it by the Dodd-Frank Act.

“Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” Cordray said in a statement. “These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone... To get the full story, subscribe now.