Warren asks banks to take public position on CFPB arbitration rule
WASHINGTON — Sen. Elizabeth Warren, D-Mass., is seeking clarity from the largest banks over whether they support a Republican effort to reverse the Consumer Financial Protection Bureau's arbitration rule.
Warren sent letters Thursday to the top executives at 16 large institutions in which she inquired why they had stayed largely silent about the rule, despite loud opposition from industry trade groups.
“A number of lobbying organizations that represent financial firms have criticized the new CFPB rule, but neither you nor your bank has publicly taken a position on it,” Warren said in the letters.
She cited industry trade groups including the U.S. Chamber of Commerce, American Bankers Association and Financial Services Roundtable, which have actively lobbied Congress to use a procedure under the Congressional Review Act to nullify the CFPB’s rule.
"These organizations represent your bank and your industry, but you — and other CEOs of large banks — have remained silent on the rule," Warren wrote. "If your lobbyists are taking such strong positions against the rule, is there a reason both you and your bank have been unwilling to take a public position?"
In addition to seeking the banks' position on the rule, Warren said she was also seeking "relevant information on your bank's use of forced arbitration clauses and the arbitration process.” The letters asks the banks how they use arbitration agreements and if they do, which products they use them for.
The CFPB rule outlaws certain arbitration agreements found in consumer financial contracts that block customers from seeking class actions. After the rule's release, Republican movement on a plan to overturn it using the CRA was immediate. The congressional procedure allows Congress to reject an agency rule with a simple majority as long as the resolution is passed within 60 legislative days of the rule being finalized. The CFPB rule was released on July 19, and the House has already passed a measure to overturn it without Democratic support.
The Senate likely has until November to pass a similar resolution and the White House has indicated it will sign the measure if it passes both chambers.
The letters were addressed to chief executives at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, U.S. Bancorp, PNC Financial Services Group, TD Group US Holdings, Capital One, HSBC North America Holdings, Charles Schwab, BB&T, Suntrust Bank, Barclays US, Ally Financial, American Express and Citizens Financial Group.
Warren asked the bank executives to respond by Sept. 1.