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Bicameral Letter Addresses CFPB’s Arbitration Proposal
Friday, August 26, 2016 6:45 AM

The chorus of congressional voices calling for credit union regulatory relief grew louder this week with a letter to the Consumer Financial Protection Bureau regarding the agency’s proposed rule on arbitration.

Signed by 36 senators and 104 representatives, the letter calls for CFPB Director Richard Cordray to reconsider the agency’s recently proposed rule on arbitration and to examine and develop alternative proposals that foster consumer choice and preserve access to efficient dispute resolution.

“Rather than giving consumers greater access to justice, the proposal will make it more difficult and more expensive for consumers to resolve disputes for service providers,” reads the letter, led by Sen. Ben Sasse (R-Neb.) and Rep. Patrick McHenry (R-N.C.).

“We appreciate the support of the Cornerstone congressional representatives who urged reconsideration of the arbitration proposal,” said Jim Phelps, Cornerstone SVP of Advocacy.  “As drafted, the proposal has the potential for unintended consequences that may harm, more than help, consumers.  If the CFPB proceeds in finalizing the proposed rule, credit unions should be exempt due to our unique, member-owned structure.”

Cornerstone sent a comment letter to the CFPB last week regarding the proposed changes to the arbitration process. In her letter, SVP Regulatory and Compliance Counsel Suzanne Yashewski expressed Cornerstone's opposition to the proposal as drafted, citing the unique structure of credit unions, which makes it important to preserve options for dispute resolution, including the option of limiting class-action litigation.

The arbitration letter follows a July letter from Sasse and Sen. Joe Donnelly (D-Ind.), which had the signatures of 70 senators that called for CFPB to tailor rulemakings to protect credit unions from regulatory burden. A similar message with 329 signatures was delivered by Reps. Adam Schiff (D-Calif.) and Steve Stivers (R-Ohio), leading to a supermajority of Congress supporting the bureau’s use of its exemption authority.