A Treasury Department report released Monday on the Consumer Financial Protection Bureau’s (CFPB) arbitration rule finds the rule could impose major costs on consumers and the bureau did not consider less onerous alternatives. CUNA has expressed a number of concerns with the rule, and supports current Congressional efforts to overturn it through the Congressional Review Act.
“The Treasury report sheds light on the fact that the rule will ‘generate massive costs borne by businesses and consumers alike.’ This is particularly true for credit union members, who are directly impacted by class action litigation since the credit union member-ownership structure means resources spent on costly litigation come out of the pockets of members through the pooled resources of the membership,” said CUNA Chief Advocacy Officer Ryan Donovan. “The CFPB’s dated research conducted from 2008-2012 fails to address these concerns, and many other developments in the marketplace over the years.
“Credit unions continue to educate policymakers about the harm class action litigation causes for credit unions because of their size and membership-owner structure CUNA, state leagues and credit unions have had a several meetings over the last several weeks – both as part of our Hike the Hill program and through state-based visits – highlighting the importance of the Senate taking action on the resolution of disapproval. We’re hopeful that the Senate will take up the resolution very soon,” Donovan added.
The Treasury’s report found that the CFPB’s rule will impose “extraordinary costs” by generating more than 3,000 class action lawsuits over the next five years while imposing more than $5000 million in additional legal defense fees (transferring $330 million to plaintiffs’ lawyers).
In addition to engaging with the CRA process, CUNA and credit unions have shared issues with the rule with a number of media platforms. CUNA President/CEO Jim Nussle wrote an op-ed that appeared in Morning Consult, and responded to another op-ed from CFPB Director Richard Cordray.