Manatt’s Richard Gottlieb, co-chair of the firm’s financial services group, discussed the fate of the Consumer Financial Protection Bureau’s arbitration rule in a Business Insurance article. A Senate vote struck down the CFPB’s rule, which would have prohibited mandatory arbitration clauses in financial services contracts, but Gottlieb explained that the CFPB may pursue alternative legislation.
“What we’re waiting on is Plan B,” said Gottlieb. “I don’t see the CFPB walking away from a mandatory arbitration regulation.” Based on the Congressional Review Act, however, a new rule would need to be different enough from the old rule in order for it to stand. Gottlieb explained that one possibility would be for the CFPB to preserve a component of the old rule which would have permitted the agency to publicize arbitrations.
“That would provide a disincentive to push people” to arbitrate, he said. “It’s a tougher argument” and may be less likely to be overturned by Congress.
Read the article here.