Every Republican member of the South Carolina Congressional delegation yesterday voted to pass a measure to overturn the Consumer Financial Protection Bureau’s (CFPB) rule to prohibit class-action waivers in virtually all financial consumer-service agreements.
Rep. Jim Clyburn (SC-6), the state's only Democrat in Congress, voted against the measure, which passed on a vote of 231-190.
The House measure's lead sponsor, Congressman Keith Rothfus (R-PA), called the CFPB rule a "pro-trial lawyer, anti-consumer, anti-arbitration rule."
“This CFPB rule, like so many other Washington rules and regulations, hurts the very people it is supposed to help,” said Rothfus. “According to the CFPB’s own study, the average recovery for members of a class action lawsuit is a paltry $32, contrasted with the average $5,389 recovery for consumers who use arbitration. If we want to help ensure consumer recoveries and justice – and we all do – depriving them of efficient and effective arbitration is not the answer. Sadly, that is precisely what will result from the CFPB’s misguided, anti-consumer rule.”
Only one Republican member of Congress, Rep. Walter Jones (R-NC), voted against the bill, which now heads to the U.S. Senate, where U.S. Senator Tim Scott (R-SC) is a co-sponsor of the measure.
Senator Lindsey Graham (R-SC) is not a co-sponsor of the measure, nor has he issued any public statements on it.
U.S. Senator Mike Crapo (R-Idaho), chair of the Senate Banking Committee and lead sponsor of the Senate bill, said the measure is needed to deal with the CFPB's "lack of accountability."
“Members of Congress previously expressed concerns with the proposed version of the (CFPB's) rulemaking – concerns that were not addressed in the final rule,” said Crapo. “The rule is based on a flawed study that leading scholars have criticized as biased and inadequate, noting that it could leave consumers worse off by removing access to an important dispute resolution tool. By ignoring requests from Congress to reexamine the rule and develop alternatives between the status quo and effectively eliminating arbitration, the CFPB has once again proven a lack of accountability. Given the problems with the study and the Bureau’s failure to address significant concerns, it is not only appropriate but incumbent on Congress to vote to overturn this rule.”
Palmetto Business Daily will continue to seek comment from both U.S. senators Scott and Graham as the Senate vote approaches.