by Jeff Sovern
In keeping with Justice Gorsuch's remark yesterday that "Democracy depends on our ability to learn from & work with those who hold very different convictions than our own," here is a partial report on the activities of arbitration supporters:
The Chamber of Commerce is holding an event titled CFPB's Anti-Arbitration Rule: Analysis & Implications that appears to be for members of Congress and the press tomorrow. State bankers' associations from every state have written a letter opposing the arbitration rule. The WSJ has editorialized about the rule. My favorite part:
In 2015 the CFPB released a 148-page study that is more political than scientific. Like the agency’s enforcement actions, the study engages in misdirection and obfuscation. The bureau avoids apples-to-apples comparisons and has stonewalled requests by the House Financial Services Committee for its raw data. But the evidence still suggests that consumers derive greater benefits from arbitration than they do from class-action lawsuits.
Except that the study is 728 pages long (maybe they stopped reading at page 148?) and conclusively demonstrates that arbitration clauses suppress consumer claims. It's hard to see how that helps consumers.
Meanwhile, Professor Jeffrey Joseph as another op-ed about arbitration in the Washington Examiner, Congress can and should kill the CFPB's arbitration rule. He writes:
And there are already limitations on corporate power in place. For example, arbitration arguments can be thrown out if the arbitration authority is found to be biased against one side of a dispute.
Of course, that does nothing about the fact that arbitration suppresses claims. Incidentally Professor Joseph apparently still hasn't heard that the PHH panel decision was vacated or that CRL thinks he is not presenting their position correctly.
Then there's the National Review, which seems not to know that the Dodd-Frank Act authorizes the CFPB to regulate arbitration. Their editors say:
The CFPB and the usual Democratic shakedown artists are making familiar arguments: The proposed CFPB regulation doesn’t violate the Federal Arbitration Act because it is narrowly tailored to cover only financial firms; such agreements are generally found in the “fine print” of contracts; and (though they generally don’t put it quite this way) financial companies are wicked and make lots of money. The first objection is irrelevant in that the Federal Arbitration Act does not contain a carve-out for financial firms; the second objection could be made about practically any contract; the third objection really does not merit a rebuttal, though it will be the most persuasive.
The law says what the law says, and such rule-making authority as the CFPB has does not entitle it to overturn an act of Congress. If the Democrats want to get rid of arbitration agreements for financial companies, then let them repeal the Federal Arbitration Act.
The law does indeed say what it says, and what it says is that the Bureau can regulate arbitration clauses.
