The Senate’s razor slim vote to repeal the Consumer Financial Protection Bureau’s arbitration rule was arguably the industry’s biggest policymaking victory since passage of the Dodd-Frank Act. But does it mean the regulatory tide has turned in banks’ favor? Many are skeptical.

“It’s a very big win for banks, and a huge victory that [the Senate] finally did it, but I don’t think the implications of it are all that broad,” said Alan Kaplinsky, the co-practice leader at Ballard Spahr’s consumer financial services group. “This was an unusual situation where there was almost universal support for an override, and look how difficult it was; they eked by.”

The 51-to-50 vote, which required Vice President Mike Pence to break a tie, overturned a rule abhorred by banks that would have prohibited arbitration clauses that preclude consumers from bringing class actions. The repeal was authorized by the Congressional Review Act, which allows lawmakers to reverse agency rules with a simple majority.

Despite the close margin, the measure was an unambiguous win for banks. It not only invalidated the CFPB regulation, but the bureau cannot bring back the regulation in the future without congressional approval, which requires 60 votes in the Senate.

Read the full article here. Subscription may be required.

Related Practice