Sen. Elizabeth Warren, D-Mass., is probing CEOs of 16 of the largest financial institutions on their stance regarding the Consumer Financial Protection Bureau’s rule limiting banks’ ability to require customers to resolve disputes in arbitration.
Warren wants to know about the firms’ use of arbitration clauses in consumer agreements as well as the outcomes of their arbitration proceedings.
In her letters to the CEOs — at firms including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup Inc. and Charles Schwab — Warren states that “a number of lobbying groups representing big banks and financial firms have condemned the rule, asserting that it will harm consumers … These organizations represent your bank and your industry, but you — and other CEOs of large banks — have remained silent on the rule.”
Warren asked the CEOs: “If your lobbyists are taking such strong positions against the rule, is there a reason both you and your bank have been unwilling to take a public position?”
The information, Warren continued, “is particularly important and time-sensitive because Republicans in Congress have introduced a resolution to reverse the CFPB rule using the fast-track Congressional Review Act process.”
The CFPB issued its rule on arbitration clauses “after spending three years conducting a congressionally mandated study of the impact of these clauses on consumers,” Warren said.
“Its analysis found that forced arbitration clauses that prohibit consumers from entering class action lawsuits against companies are commonplace in financial product contracts, and make it more difficult for consumers to hold banks accountable for misconduct.”
Warren asked the CEOs to tell her by Sept. 1 whether they agree or disagree with the CFPB’s analysis and also requested data on how their firms have fared in arbitration during the past five years.