On November 1, President Trump signed legislation disapproving a CFPB rule designed to prohibit class action waivers in certain consumer financial services contracts. In so doing, Trump rejected a last minute personal appeal from Obama-appointed CFPB head Richard Cordray to save the rule. The legislation had been awaiting the President’s signature since October 24, when Vice President Mike Pence cast the tie-breaking vote on a Senate-approved resolution under the Congressional Review Act to put an end to the CFPB’s final rule; the vote on the joint resolution simply stated, “Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Arbitration Agreements’ (82 Fed. Reg. 33210 (July 19, 2017)), and such rule shall have no force or effect.”
Trump’s stamp of approval comes as no surprise. In an official statement on the matter, the White House previously applauded the joint resolution: “By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB’s uninformed and ineffective policy.” Acting Comptroller of the Currency Keith Norieka echoed this sentiment in a post-signing Treasury Department press release. As we previously reported, the rule had been anticipated by many across the financial services industry after more than 110,000 comments were submitted in response to the May 2016 proposed rule. As enacted earlier this year, with a September 18, 2017 effective date and a March 19, 2018 compliance date, the final rule prohibited covered providers of consumer financial products or services, such as credit cards and bank accounts, from using arbitration clauses in consumer contracts to require consumers to resolve their disputes individually, rather than on a class-wide basis.