by Jeff Sovern
The ABA Banking Journal (that's the banking ABA, not the lawyers' ABA) has the story here. Except:
The OCC has conducted a study finding that the Consumer Financial Protection Bureau’s arbitration rule is likely to increase the cost of credit by about 25 percent once lenders factor in the cost of class action litigation, Acting Comptroller Keith Noreika said today at a fintech conference hosted by the Federal Reserve Bank of Philadelphia.
* * *
He said the OCC conducted the study because it wanted to review the effects of the CFPB’s rule — which virtually bans mandatory arbitration agreements in contracts for financial products and services — on banks and the customers they serve. “What originally caught my eye…was the potential impact that may have on small institutions…that really may face a massive litigation exposure,” he said.
That study, which I couldn't find on the OCC web site
, conflicts with the CFPB study
, which reported that banks that dropped arbitration clauses did not raise their prices. It is also hard to reconcile the statement in the second paragraph quoted above about the impact on small institutions, with the fact that many small institutions, such as credit unions, have not added arbitration clauses to their contracts. Norieka, a former bank lawyer, is temporarily serving as Comptroller. It will be interesting to see if, when he leaves the OCC, he represents banks that would benefit if Congress blocks the CFPB rule from going into effect. A new comptroller may soon be confirmed, as earlier this month the Senate Banking Committee voted to confirm
the nominee, Joseph Otting. I look forward to seeing the OCC study when it becomes available.
UPDATE: While I still cannot find the OCC report on the OCC web site, it has now surfaced on a Ballard Spahr web site
. The report spans five pages. It takes issue with the CFPB's finding that the companies which abandoned arbitration clauses did not raise their prices, and so I am changing my headline above. I'm afraid I am not sufficiently comfortable with my understanding of statistics to offer a useful comment about the report.