Senator Elizabeth Warren (D-Mass.) has authored letters to the CEOs of 16 large financial institutions asking whether they support or oppose the Consumer Financial Protection Bureau's recent rule banning forced arbitration.
The letters also request data on the firms' use of arbitration clauses in consumer agreements and the outcomes of arbitration proceedings.
The CFPB rule restores consumers’ right to file or join group lawsuits. Companies can still include arbitration clauses in their contracts, but may not use arbitration clauses to stop consumers from being part of a group action. It includes specific language that companies will need to use if they include an arbitration clause in a new contract.
The rule applies to the major markets for consumer financial products and services overseen by the Bureau, including those that lend money, store money, and move or exchange money.
Since the rule’s passage, the House of Representatives has advanced legislation that would use Congressional Review Act authority to repeal the rule and prevent the Bureau from issuing any similar rule relating to arbitration. Under the CRA, Congress has the ability to reject new federal regulations within 60 legislative days of publication in the Federal Register.
Representatives from banking associations in all 50 states (and Puerto Rico) also wrote letters to Senate leadership urging them to utilize the CRA to keep the CFPB’s final arbitration rule from taking effect.
“A number of lobbying groups representing big banks and financial firms have condemned the rule, asserting that it will harm consumers,” Warren wrote in the template for the personalized letters sent on Aug. 10. “These organizations represent your bank and your industry, but you…have remained silent on the rule.” Warren asked: “If your lobbyists are taking such strong positions against the rule, is there a reason both you and your bank have been unwilling to take a public position?"
In requesting information about the banks' positions on the CFPB rule and their use of arbitration, Warren said “this information is particularly important and time-sensitive because Republicans in Congress have introduced a resolution to reverse the CFPB rule using the fast-track Congressional Review Act process."
The letter asked CEOs to explain, by Sept. 15, whether they agree or disagree with the CFPB's analysis, and for data on how their firms have fared in arbitration during the past five years.
The letters were sent to the heads of JP Morgan Chase, Bank of America, Wells Fargo & Company, Citigroup Inc., U.S. Bancorp, PNC Financial Services Group, Inc., TD Group US Holdings, Capital One Financial Corporation, HSBC North America Holdings, Charles Schwab Corporation, BB&T Corporation, Suntrust Bank, Barclays US, Ally Financial Inc., American Express Company, and Citizens Financial Group.