The Consumer Financial Protection Bureau (CFPB) issued a final rule on pre-dispute arbitration agreements on July 10, 2017. The final rule was published in the Federal Register on July 19, 2017, and as such, it is due to become effective on September 18, 2017 (60 days from the date the rule is published). The final rule prohibits consumer financial services providers from including terms in arbitration agreements that limit a consumer’s ability to join or initiate a class action lawsuit.
The final rule sparked both praise and opposition from various groups around the country. While several groups quickly began publishing articles and writing letters, one group that has the power to stop the new regulation in its tracks decided to step in—Congress.
The House of Representatives elected to utilize the newly dusted-off Congressional Review Act (CRA) in an attempt to invalidate the recently adopted rule. The CRA allows Congress to disapprove of any regulations issued by executive agencies within 60 legislative days of publication in the Federal Register. Importantly, a “resolution of disapproval” under the CRA requires only a simple-majority vote, with no chance of amendment or filibuster. If the House, Senate, and president disapprove of the regulation, the regulation is effectively “killed” and cannot be reissued by the agency.
In this case, it took the House of Representatives only 15 of the allotted 60 days to vote in favor of striking down the CFPB’s final rule. The 231-190 vote, which took place on July 25, 2017, almost uniformly followed party lines. Meanwhile, Senate Banking Committee Chairman Mike Crapo (R-Idaho) has already introduced the Senate version of the resolution of disapproval. However, the date for the Senate vote has not yet been finalized.
With the Senate now in recess until September 5, we will have to wait to see what happens next. If Republicans can gather enough votes for a simple majority to vote for disapproval, then the resolution will only need President Trump’s blessing. Given the fact that the Trump administration has been adamant about its position on regulation, it is highly unlikely that we would see a veto from the president. Thus, the fate of the CFPB’s final rule will likely rest in the hands of a simple majority of the U.S. Senate once sessions resume on September 5, 2017. Under the language of the CRA, the Senate will have 60 legislative days from the date that the rule was published, July 19, 2017, to vote on the resolution for disapproval.