Will Equifax Change the Prospects for Congress Blocking the CFPB Arbitration Rule?

by Jeff Sovern

That's the question discussed in Ian McKendry's article in the American Banker, GOP undeterred by Wells, Equifax in seeking arbitration rule repeal. Arbitration advocates hope and predict it won't, as this except shows:

"I don't necessarily want to conflate" the Equifax breach "with the arbitration rule," said [Senator Thom] Tillis [R-SC].

The financial services industry is also fighting back against that comparison. Ryan Donovan, chief advocacy officer at the Credit Union National Association, said using the breach as a reason to support the arbitration rule is a "red herring because it is a totally different situation in which consumers who had no established relationship with Equifax could have been forced to arbitrate certain claims."

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Senate Banking Committee Chairman Mike Crapo, R-Idaho, who authored the Senate resolution, said he is confident that Republicans won't be changing their mind because of the Equifax breach.

"I believe the issue is out there and they are well informed already," said Crapo.

That last seems like an admission that arbitration sharks won't allow newly-learned facts to influence their opinions. And here is an interesting perspective:

"The arbitration issue has become so muddied that it is increasingly difficult for Democrats to draw a straight line from the scandals on the front page to the arbitration Congressional Review Act resolution itself," said Isaac Boltansky, an analyst at Compass Point. "First, Wells Fargo is the reason the arbitration rule needs to be protected and then it's Equifax and at that point it is a confluence of different scandals that make it more difficult to hone a clear and crisp message for those supporting the rules."

I'm afraid I disagree with Mr. Boltansky: Wells Fargo and, perhaps to a lesser extent, Equifax, are examples of why we need the CFPB arbitration rule.  And if that rule is defeated, we can count on other such examples in the future.    

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