The House and Senate actions were taken pursuant to the Congressional Review Act (CRA), which establishes a fast-track procedure under which Congress can override a federal agency’s final rule by passing a resolution of disapproval that cannot be filibustered in the Senate and only requires a simple majority vote.
The arbitration rule became effective on September 18, 2017, with a March 19, 2018, mandatory compliance date. Under the CRA, enactment of a resolution of disapproval blocks a rule from taking effect or continuing. Accordingly, the signing of the joint resolution by President Trump means the CFPB arbitration rule is no longer effective.
The CRA also provides that enactment of a resolution of disapproval prevents an agency from reissuing the disapproved rule in substantially the same form or from issuing a new rule that is substantially the same, unless the reissued or new rule is specifically authorized by a law enacted after the date of the resolution of disapproval. Thus, without new authority from Congress, the CFPB cannot reissue the arbitration rule with substantially similar prohibitions and requirements for companies using arbitration agreements or issue a new rule containing substantially similar prohibitions and requirements.
Acting Comptroller of the Currency Keith Noreika issued a statement in which he applauded the President and Congress for vacating the CFPB rule. He called the override “a victory for consumers and small and midsize banks across the country because it stops a rule that likely would have significantly increased the cost of credit for hardworking Americans and taken away a valuable tool for resolving differences among banks and their customers.”