On Tuesday, the Senate, with a tie breaking vote from Vice President Pence, voted to block the Consumer Financial Protection Bureau’s (CFPB) Arbitration Rule.
The Arbitration Rule would have barred companies from requiring consumers to enter into new contracts after March 2018 that contained mandatory arbitration clauses. The CFPB promulgated the Arbitration Rule on July 19, 2017, with an effective date of September 18, 2017.
The Arbitration Rule had drawn immediate criticism, including from the Office of the Comptroller of the Currency (OCC). On Monday, the Treasury Department also criticized the Arbitration Rule. Earlier this year, House Republicans passed legislation to block the Rule. The Senate voted 51 to 50 to block its implementation. Senators Lindsey Graham (R) of South Carolina and John Kennedy (R) of Louisiana broke party lines and opposed the resolution. President Trump will need to approve the resolution, officially killing the Arbitration Rule. Since President Trump previously criticized the Arbitration Rule, it is likely he will approve the resolution barring the Rule.
The polarizing Arbitration Rule divided not only Congress, but also financial institutions, from the CFPB and consumer watch groups. The resolution blocking the Arbitration Rule may signal a shift in Congress’ view of other CFPB initiatives, such as recent rules targeting the payday lending industry.