WASHINGTON—The U.S. Chamber of Commerce, Financial Services Roundtable and various financial trade associations last week filed a lawsuit against the CFPB over its arbitration rulemaking.
The lawsuit was filed in the U.S. District Court for the Northern District of Texas, Dallas Division, NAFCU reported.
The plaintiffs are challenging the constitutionality and legality of the CFPB’s rule, citing the following:
- The rule stems from the unconstitutional structure of the CFPB
- The rule violates the Administrative Procedure Act (APA) because the CFPB relied on a "deeply flawed study"
- The rule violates the APA because it fails to take into account important aspects of the problem it is attempting to address
- The rule violates the Dodd-Frank Act because it precludes the use of a dispute resolution mechanism that generally benefits consumers (arbitration) for one that typically does not (class-action litigation)
NAFCU noted that it has told the CFPB that while it strongly supports consumer protections, credit unions should not have been included in this rulemaking as they are not the bad actors the rule is meant to target. The association also wants credit unions to have access to various forms of dispute resolution and told the CFPB that the rule's reporting requirements could lead to a rise in frivolous lawsuits.
The House in July passed a resolution expressing disapproval of the final rulemaking. Under the Congressional Review Act, legislators can vote to overrule new federal regulations with a joint resolution of disapproval within 60 legislative days after regulators have submitted the rule to Congress. The Senate has yet to vote on the resolution. While there is still time for the Senate to act, the rule has technically taken effect, NAFCU noted.
The lawsuit was filed by the Chamber, American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable and a coalition of associations in Texas.