Senate approves bill allowing financial institutions to bar class action suits by requiring arbitration News
Senate approves bill allowing financial institutions to bar class action suits by requiring arbitration

The US Senate [official website] on Tuesday approved [bill materials] HJ Res 111 [text], which cancels a Consumer Financial Protection Bureau (CFPB) [official website] rule related to arbitration agreements.

The canceled CFPB rule, 82 FR 33210 [Summary], prevented providers of specified consumer financial products and services from requiring consumers to sign arbitration agreements that barred them from participating in class action lawsuits. The rule was enacted in July and became effective in September. HJ Res 111 will thus allow these financial institutions to enforce arbitration agreements that prevent consumers from filing class-action lawsuits against the financial institutions.

The bill was passed by a vote of 51-50 [vote record] with Vice President Mike Pence casting the tie breaking vote. The vote was largely along party lines with Senators Graham and Kennedy being the only Republican senators to vote against the bill. The bill has previously passed the House of Representatives with a vote of 231 – 90 [vote record]. The bill must now be signed by President Donald Trump in order to become law.

The president is expected to sign the bill as the White House has stated [CNN Report] that “the CFPB’s rule would neither protect consumers nor serve the public interest.”

In June the House of Representatives also passed [JURIST report] a separate bill that removes many other restrictions put on financial institutions that were enacted following the 2008 financial crisis. That bill, HR 10 [Text], has not yet passed the Senate.

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