U.S. Senate passes resolution killing CFPB arbitration rule in 51-50 vote

The Senate passed a resolution this week invalidating the problematic arbitration rule by the Consumer Financial Protection Bureau that banned class action waivers by financial institutions in predispute arbitration agreements with consumers. Although the CFPB is specifically prohibited from regulating dealers, it does regulate financial entities that provide sales and lease services to dealers, and ultimately to consumers. So indirect liability was a big potential problem for dealers under the CFPB rule. The rule had a compliance deadline of March 19, 2018.

The vote was as close as they come: 51-50, with Vice President Pence casting the tie-breaking vote. Next week’s Bulletin will have a fuller discussion of the vote and its consequences.

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