U.S. regulator asks Trump not to
dismantle class-action rule
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[October 31, 2017]
By Lisa Lambert and Pete Schroeder
WASHINGTON (Reuters) - A top U.S. regulator
for Wall Street took the unusual step on Monday of directly asking
President Donald Trump to veto a resolution that allows financial
companies to block customers from banding together to sue, a request
likely to be ignored.
The Consumer Financial Protection Bureau, an independent regulator
headed by Democrat Richard Cordray, finalized a rule in July barring
banks, credit-card issuers and other financial companies from requiring
customers to give up their rights to join group lawsuits, known as class
actions, and only take potential disputes to closed-door arbitration.
Congress recently voted to kill the rule in a special resolution that
Trump, a Republican, is expected to sign into law soon.
"You alone now have the power to safeguard people's ability to take
action together and go to court when they are wronged," Cordray,
expected to resign soon to run for Ohio governor, wrote to Trump.
White House officials were not immediately available to comment on the
In class actions, individuals with the same complaint band together to
lower lawsuit costs.
Trump has not vetoed any legislation since taking office in January. But
he has frequently criticized both Cordray, appointed by former
Democratic President Barack Obama, and the CFPB, established after the
financial crisis to protect individuals against predatory lending.
Cordray wrote he had never met or spoken to Trump, but that "many have
told me.... your mind is made up" about the resolution.
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Consumer Financial Protection Bureau Director Richard Cordray speaks
in Washington, October 17, 2014. REUTERS/Larry Downing
Shortly after the Senate passed the resolution last Tuesday, the
White House released a statement saying the CFPB rule would give
consumers fewer options to resolve disputes quickly and efficiently
and would primarily enrich trial lawyers. The administration has
also said the CFPB used faulty research to write the rule.
The CFPB says its five-year study into mandatory arbitration was
thorough and its rule based on sound data. Rule supporters say
arbitration is stacked in favor of companies, which hire the
mediators, and that the right to trial is enshrined in the
Constitution. On Friday, military veterans also asked for a veto.
Regulators almost never make personal pleas for vetoes, let alone
release their requests publicly.
Cordray has a strained relationship with Republicans, who say he has
too much power because he both writes and enforces rules and can
only be fired "for cause," a strict standard nearly impossible to
meet. Trump has gone as far as arguing in court filings that the
CFPB is unconstitutional and he should have the power to fire its
(Reporting by Lisa Lambert and Pete Schroeder; Editing by Peter
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