The Consumer Financial Protection Bureau‘s leader on Monday urged President Donald Trump to veto a congressional resolution to eliminate an arbitration rule that would give consumers the chance to file class actions against banks and other financial firms, with the aim to keep the CFPB Arbitration Rule intact.
CFPB Director Richard Cordray asked the president to uphold the federal consumer finance watchdog’s rule that would stop banks and other companies from including class action bans in arbitration clauses in the fine print of contracts with consumers. Using the Congressional Review Act, the U.S. Senate voted 51-50 last week to overturn the rule, with Vice President Mike Pence casting the deciding vote in an evenly divided chamber.
The Senate vote came after the U.S. House of Representatives voted on its own CRA measure to eliminate the arbitration rule in July, and sent the joint disapproval resolution up to the president’s desk.
The White House has put out a statement indicating that the president will sign the measure, although he has yet to do so.
Cordray’s letter Monday pushed Trump to reconsider his support for getting rid of the arbitration rule.
“Many have told me I am wasting my time writing this letter — that your mind is made up and that your advisors have already made their intentions clear. But this rule is all about protecting people who simply want to be able to take action together to right the wrongs done to them,” Cordray said.
The CFPB rule, released in July, would have barred companies from putting class action bans in their arbitration agreements, allowing consumers to sign on to class action litigation against credit card companies, payday lenders and other firms that have used such bans in the past.
While supporters and opponents of the arbitration rule have fought a pitched battle over the statistics the CFPB used to justify writing the rule, Cordray on Monday made a simple appeal to Trump, citing the president’s own extensive litigation history.
“You and I have never met or spoken, but I am aware that over the course of your long career in business you often found it necessary to go to court when you thought you were treated unfairly,” Cordray’s letter said.
The CFPB director also said that the fight over statistics was obscuring the rule’s purpose. Cordray said that his bureau’s rule was intended to give consumers a chance to fight back when they are wronged, and that the industry was attempting to hide this fact.
“I know that some have made elaborate arguments to pretend like that is not what is happening. But you are a smart man, and I think we both know what is really happening here,” Cordray said.
The White House could not immediately be reached for comment.
Also of note in the letter is the statement that Cordray has never spoken with or met the president during his 10 months in office. Opponents of Cordray and the CFPB, including powerful members of Congress and industry lobbies, have been pushing the president to fire the bureau’s first and only director.
The Dodd-Frank Act, which created the CFPB, says that the bureau’s director can be fired only for cause, although the D.C. Circuit is weighing a case that could change that portion of the 2010 law.
Monday’s letter shows that Cordray may have been flying a bit under the president’s radar, although that may no longer be the case.
The above story was reported by Law360.