In Wednesday’s edition of Consumer Law & Policy Blog, Professor Jeff Sovern laments that during Director Rohit Chopra’s recent testimony before the Senate Banking Committee and the House Financial Services Committee, neither he nor any member of the Committees mentioned “arbitration” as an action item on the CFPB’s agenda. Professor Sovern expresses hope that the arbitration issue will nevertheless appear on the CFPB’s regulatory agenda when it is soon published. Don’t hold your breath, Professor Sovern!

There are many reasons why it would be foolish for the CFPB to revisit arbitration:

1. Director Chopra already has a very robust agenda for the CFPB. Among other things, that includes rulemakings under Section 1071 of Dodd-Frank (small business loan data collection) and Section 1033 of Dodd-Frank (consumer access to data). Both of these rulemakings are very complex and controversial. The CFPB does not have the bandwidth and resources to take up arbitration which would also undoubtedly be complex and controversial. 
2. Director Chopra’s term may end in 2024. It would not make practical or political sense for him to launch another arbitration rulemaking which would never be completed within his term in office. The CFPB’s original arbitration rulemaking took five years from beginning to end and it ended up very badly for the Bureau since Congress passed a joint resolution to repeal the rulemaking under the Congressional Review Act. Even if Congress had not done that, a lawsuit would have been filed against the CFPB to invalidate the arbitration rule. 
3. Under the Congressional Review Act, the CFPB is disabled from promulgating a similar arbitration rule. The Bureau would not be able to ban class action waivers in arbitration provisions. It also seems doubtful that the CFPB would ban consumer financial services arbitration altogether, both because they may be barred from doing that by virtue of the Congressional Review Act and because the CFPB’s earlier study of arbitration did not support an all-out ban of arbitration. Indeed, the data in that earlier study showed that individual arbitration is faster, cheaper and more beneficial for consumers than class action litigation.
4. In order to propose a new arbitration rule, the Bureau could not rely on the study it conducted prior to proposing its original arbitration rule. Instead, the CFPB would need to go back to square one and initiate a new study which would take years to complete and without being assured of success. 
5. Federal agencies are generally loathe to interfere with bills pending before Congress. The House recently passed the FAIR Act which would ban all consumer arbitration. Since Congress is already dealing with the issue, it would be presumptuous and improper for the CFPB to interfere. 

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