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October 11, 2017

In the News Today – October 11, 2017

Study Finds CFPB Anti-Arbitration Rule Will Cost Consumers

The Office of the Comptroller of the Currency released a study finding that lenders may charge up to 25% more for credit after factoring in the cost of class action litigation stemming from the CFPB’s anti-arbitration rule, reports the ABA Banking Journal.

Acting Comptroller of the Currency Keith Noreika said the effects of the rule “could be as high as a three-and-a-half percent annual percentage rate increase for consumers” looking to buy credit. Noreika also said small business could “face a massive litigation exposure,” thanks to the CFPB’s rule. 

The U.S. Chamber Institute for Legal Reform and the U.S. Chamber of Commerce have been leading the charge to repeal the rule. The Chamber, joined by a coalition of 17 other business groups, is now leading a legal effort to challenge the rule.

“Arbitration Is Back at the Supreme Court” 

The U.S. Supreme Court will hear challenges to the National Labor Relations Board’s (NLRB) 2012 decision that opened the door to labor class action lawsuits. The Wall Street Journal Editorial Board said the case will settle a question over “whether a federal agency can impair valid contracts and override federal law as well as Supreme Court precedent.”

In 2012, the NLRB ruled that arbitration waivers violated Section 7 of the National Labor Relations Act, despite the fact that this section of the law does not mention litigation. This decision is in contrast to a 2011 Supreme Court decision that found that the Federal Arbitration Act made such agreements enforceable and valid.

The Supreme Court’s fall session begins today.

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