CBA Testifies to House Financial Services about Arbitration Benefits

May 20, 2016

CBA's Vice President and Regulatory Counsel Dong Hong testified before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit on Wednesday, May 18, 2016. The hearing examined the CFPB's proposed rulemaking on arbitration. Key takeaways from the hearing include:

  1. Republicans generally agreed consumers benefit from being able to participate in arbitration.  Also, they were highly critical of the class action bar and the limited benefits of class action lawsuits realized by consumers.  The CFPB's study came under scrutiny for being inadequate at assessing the merits of arbitration and the unintended consequences that would follow from a restriction, including the elimination of certain products and services and decreased credit access.
  2. Some Democrats were supportive of the CFPB's proposal.  Others, however, suggested the possibility of a more balanced approach, such as class-wide arbitration for consumers.
  3. Republicans also noted the CFPB's broad enforcement and supervisory authority.  Given this authority, several Republicans argued the Bureau should be well-equipped to address marketplace abuses.  The members wondered why there also is a need for private right of action.

Dong Hong's testimony may be accessed here and a full summary of the hearing may be accessed here.