Financial Services and General Government Appropriations Act, 2017
Floor Speech
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Mr. WOMACK. Mr. Chairman, I thank the gentleman for the time and also his great work as chairman of the subcommittee. As a proud member of the subcommittee, we are going to miss Mr. Crenshaw. It has been a delight to work with him as well as the ranking member, Mr. Serrano, for his tireless effort on behalf of these issues.
Mr. Chairman, for 90 years--for 90 years--Federal law has protected the enforceability of arbitration agreements because arbitration provides an alternative method of resolving disputes that is quicker and cheaper than the expensive, overburdened court system.
Hundreds of millions of contracts are based on this principle: credit card contracts, checking accounts, Internet agreements, cell phones, and cable TV. There are dozens of contracts that have this provision.
Don't let my colleagues across the aisle fool you on this subject. Arbitration empowers individuals. Injured parties can obtain fair resolution of disputes without the need of an attorney. But many oppose this approach, particularly plaintiffs' attorneys, because arbitration proceedings can't be used to bring lawyer-driven class actions that provide millions in legal fees but little or no benefit to the consumer.
Dodd-Frank authorized the CFPB to conduct a study of arbitration and at the same time granted CFPB authority to promulgate a regulation for related products or services within the bureau's jurisdiction. However, this authority was caveated, Mr. Chairman, with the requirement that any rule be in the public interest and for protection of consumers while remaining consistent with the results of the bureau's arbitration study.
Mr. Chairman, Congress wanted any regulation to be based on a fair, complete study of real-world implications of regulating or banning arbitration. Yet, CFPB's study--which led to its May, 2016, proposed regulation effectively eliminating arbitration--fell far short of the requirements set by Congress.
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Mr. WOMACK. So, Mr. Chairman, that is why the Appropriations Committee approved language in our bill to address this issue, and we did so unanimously. Now Congress has to step in again to restore basic fairness to the effort to regulate arbitration.
Section 506 of this bill simply ensures that no rule issued by the bureau shall be effective until the bureau evaluates the costs and benefits to consumers associated with conditioning or limiting the use of arbitration and specifically, Mr. Chairman, finds that the demonstrable benefits of the rule outweigh the costs to consumers.
Any attempt to strike it would be misguided.
So, Mr. Chairman, I urge a ``no'' vote on the amendment by the gentleman from Minnesota.
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