Created to help protect consumers by providing a means of legal recourse against abuse by large financial institutions, the arbitration rule banned certain companies from the use of ‘mandatory arbitration’ clauses in their consumer contracts.
Mandatory arbitration clauses restrict consumers ability to seek legal redress and prevent plaintiffs from participating in class action lawsuits against the institution. The rule, created by the Consumer Financial Protection Bureaus (CFPB), prevented powerful, scandal-prone institutions from taking advantage of its clients by forcing them to waive such legal options as mandatory arbitration.
That which benefits the masses, however, is often an affront the affluent – and in this administration, the affluent are running the show. And so, multi-millionaire head of the U.S. Treasury Department, Steven Mnuchin, claimed the Consumer Financial Protection Bureau rule to protect financial consumers was ‘ineffective’ and needed to be repealed – and so it was shortly thereafter.
Status
Nov. 1st, 2017 REPEALED
Repealed by Republican controlled congress and signed into effect by President Donald Trump.
Arbitration Rule | Brookings Deregulation Tracker
Notables
- All Senate Democrats and two Senate Republicans voted against repealing the rule, leading to a 50-50 vote, which required Vice President Mike Pence to cast a tie-breaking vote in favor of repeal.
Pence breaks tie in Senate vote to ax arbitration rule | POLITICO (10.24.17)
