United States: Senator Warren Asks Bank CEOs To Publicly Take Positions On CFPB Arbitration Rule

Last Updated: August 21 2017
Article by Steven D. Lofchie

Most Read Contributor in United States, July 2018

Senator Elizabeth Warren (D-MA) sent letters to the CEOs of 16 major financial institutions asking for information related to the Consumer Financial Protection Bureau ("CFPB") arbitration rule.

Both House and Senate Republicans have recently introduced resolutions to block the rule using the Congressional Review Act, and the House resolution was approved on July 25, 2017. In light of this effort, Senator Warren requested that the CEOs of the 16 banks publicly express whether they support or oppose the rule. Senator Warren pointed to the lobbying groups that represent these banks and questioned why the financial institutions themselves would not take a position publicly:

"These organizations represent your bank and your industry, but you – and other CEOs of large banks – have remained silent on the rule. 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?"

While asking the banks to take a public position, Senator Warren also maintained that the information would be used in order to contribute to a better understanding of potential effects that may come from a reversal of the rule:

"This rushed process leaves little time for public hearings and other traditional congressional fact-gathering. I am seeking this information so that the public, my colleagues, and I can better analyze the impact of reversing this CFPB rule."

In addition to requesting information regarding the banks' positions on the rule, Senator Warren solicited data on outcomes of customer arbitration cases against the banks. She also requested that the banks provide copies of internal or public documents that demonstrate the impact of the rule on customers or company profits, and asked that each of the banks respond to her letter by September 1, 2017.

Commentary / Steven Lofchie

There is little mystery as to why banks might choose to "remain silent" at this stage. They do not want to subject themselves to overtly political attacks, or be used in an obvious political stunt by Senator Warren. Senator Warren's requests for a mountain of information from these banks suggest that the information gathered to date by the CFPB is lacking and that the resolutions under the Congressional Review Act are warranted. The fact that the Senator feels it necessary to ask these questions, rather than being able to argue from evidence already gathered by the CFPB, seems like an admission that the rulemaking was insufficiently considered.

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