WASHINGTON–NAFCU and CUNA have joined with two bank trade association in a letter to Congress expressing opposition to the Green Amendment to HR 1500.
The amendment would reinstate the Consumer Financial Protection Bureau’s rule on arbitration agreements, which Congress voted to disapprove in 2017.
“Returning to this flawed rule would undermine the ability of the members of our organizations to continue to offer arbitration, which is a convenient, simple, and efficient dispute resolution process for our customers,” the letter reads. “Arbitration can ensure that consumers receive faster, more cost-effective, and higher recovery resolutions than offered by class action litigation favored by trial attorneys, and it will be harmful to these consumers if this dispute resolution process is eliminated.”
The letter further argues that in addition to being “inconsistent” with the findings of the Bureau’s 2015 arbitration study, the CFPB’s rule was “contrary to the public interest and at odds with consumer protection.” The groups state the Bureau’s own examination of arbitration found it to be a faster, more cost-effective, and a higher recovery alternative to class action litigation in resolving consumer disputes.
’12 Times Faster’
“In fact, arbitration is up to 12 times faster than litigation in providing consumers with a resolution to their dispute. Additionally, the CFPB’s study found the average cash relief for consumers in arbitration is a notable $5,400 and for consumers in class action a meager $32,” the letter reads. “The facts are simple – consumers in class actions receive pennies on the dollar while trial lawyers have collected approximately $424 million in fees over the period studied, an average of more than $1 million per case.”
Finally, the groups pointed to the CFPB’s own findings that the rule would lead to a rise in litigation costs, which would be passed through to consumers either through higher prices or reduced quality of products or services.
“Put simply, the CFPB’s rule would harm the consumers it purports to help, instead enriching trial attorneys at their expense,” the letter reads.
In addition to NAFCU and CUNA, the letter is signed by the American Bankers Association, the Consumer Bankers Association and the Bank Policy Institute.
Other Letters Sent
Meanwhile, the trade groups have also sent a flurry of other letters to Capitol Hill, including:
Concerns Over Housing Finance
CUNA wrote to the House Financial Services Committee leadership stating credit union members are committed to ensuring the housing finance market remains both accessible and affordable to minority borrowers. The letter was sent as the committee conducted a hearing on oversight of the Department of Housing and Urban Development. The full letter can be found here.
Hood Urged to Intervene With FCC
With the FCC scheduled to consider its draft Declaratory Ruling and third Further Notice of Proposed Rulemaking (FNPR) on June 6, which would block robocalls by default, CUNA sent a letter to NCUA Chairman Rodney Hood to express “serious concerns” with the ruling and request that he intervene by asking that the FCC delay and reconsider.
“We have significant concerns that the action the Commission intends to take is overly broad and could have a significant adverse impact on credit unions’ and other financial service providers’ ability to communicate with their members and customers,” CUNA President/CEO Jim Nussle wrote. “Our concerns are compounded by fact that the Commission’s order will become effective upon adoption in less than three weeks.”
The letter goes on to state consumers are harmed when they cannot receive time-sensitive calls and text messages with important information including communications between credit unions and their members.
“CUNA believes that that FCC’s ruling will, unfortunately, further erode credit unions’ ability to relay information on and implement consumer protections regarding fraud, privacy, and account activity,” Nussle continues. “As a result, the proposed declaratory ruling could not only potentially endanger consumers’ financial wellbeing, but also safe and sound credit union practices.”
The full letter can be found here.
‘Reasonable Protections Sought’
CUNA sent a letter to the Senate Banking Committee (SSBC) seeking “reasonable protections,” including those under the Bank Secrecy Act (BSA), aimed at reducing financial crimes. The letter was sent ahead of the committee’s hearing on combating illicit finance and takes a closer look at the Finance Crimes Enforcement Network’s (FinCEN) Customer Due Diligence (CDD) Rule and the associations concerns with BSA, anti-money laundering (AML), and Office of Foreign Assets Control (OFAC) regulations.
CUNA noted the CDD Rule amends BSA regulations to improve financial transparency and prevent criminals and terrorists from misusing companies to disguise illicit activities and launder ill-gotten gains, with the trade group saying it supports these objectives and is further urging the SBC to encourage FinCEN to work with the credit union industry on compliance issues as they arise.
The letter, which includes five recommendations, can be found here.