Usually when Congress orders a government agency to study an issue, that's pretty much where it ends. A report eventually arrives on Capitol Hill, but lawmakers remain too divided to take action, which was precisely why they ordered a study in the first place.
The outcome figures to be far more consequential for a study now under way at the Consumer Financial Protection Bureau on the use of arbitration agreements by banks and other providers of consumer financial products. Because the research is likely to shape eventual regulations - with billions of dollars potentially at stake - financial institutions and consumer groups have been lobbying to influence its design.
The most recent salvo came in late November, when the Pew Charitable Trusts released a report that included the results of a public opinion poll it commissioned.
"Consumers overwhelmingly want a choice between court and arbitration," the report stated, noting that 68% of people surveyed believe that aggrieved consumers should get to choose between filing suit and going before an arbitrator, while 21% believe arbitration should be mandatory.
Although the Pew report did not make any policy recommendations, it seemed to point in the direction of stricter rules on the use of arbitration by banks and credit unions. The report raised the ire of lawyers at Ballard Spahr LLP who specialize in counseling financial institutions on arbitration clauses. They sent out a response blasting the study's methodology.
"I thought the Pew study was so deeply flawed and so slanted," said Alan Kaplinsky, a partner at Ballard Spahr.
The dust-up illustrated the lengths that both industry representatives and consumer advocates are going to influence the implementation of the Dodd-Frank Act.
While Congress was still debating the 2010 financial reform law, there was a Democratic proposal to give the CFPB wide authority to ban what are known as pre-dispute mandatory arbitration requirements. The final version of the law was slightly more favorable to the banking industry, because it required that any such ban be supported by the results of the agency's study.
Today, any proposed regulations on arbitration are likely more than a year away, and the bureau has made clear that it does yet not want public input on the question of whether new regulations would be appropriate. What's at stake so far - because Dodd-Frank gave the bureau the authority to regulate the use of arbitration, but only after studying the issue - is merely what questions the CFPB should be asking as part of its research.
According to Pew's research, slightly more than half of the nation's 50 largest banks and credit unions have mandatory arbitration clauses in their checking account agreements. Arbitrators also resolve disputes involving insurance policies, credit card agreements, and debt collection practices, among other consumer financial products.
Banks contend that arbitration offers a cheaper, more efficient way to resolve disputes than the court system does, and that consumers fare better.
"In the class-action suits, the main winners are the plaintiffs' attorneys," said Nessa Feddis of the American Bankers Association.
Consumer lawyers counter that in many class-action suits, consumers do benefit, and also that financial institutions often write their arbitration clauses in such a way that consumers have an exceedingly difficult time pursuing a claim. One common clause in checking account agreements is a ban on joining class-action suits.
"What's generally happening is arbitration is being used to wipe away consumer claims entirely," argued Paul Bland, an attorney with Public Justice, a law firm that frequently represents consumers in suits against corporations.
The Pew study included a survey of 603 Americans, and it found strong opposition to certain aspects of arbitration clauses, such as the right of the financial institution to choose the arbitrator. Implicitly, the survey served as a rejoinder to a 2005 poll that has been cited by financial institutions as showing strong support for arbitration among consumers who have been through the arbitration process.
"Given the prevalence of these clauses, we wanted to see what was consumer awareness and understanding of them," said Susan Weinstock, director of Pew's Safe Checking in the Electronic Age Project.
Ballard Spahr said the Pew survey was misleading, because it framed certain questions in a way that ignored how the arbitration system actually works.
The law firm also accused Pew Charitable Trusts of having an agenda - despite the nonprofit organization's contention that it was not making recommendations - by pointing to a 2005 Pew report that opposed the use of binding arbitration clauses in credit card agreements.
Likewise, there was initially deep skepticism inside the banking industry about the CFPB's arbitration study, and there is still a belief among industry insiders that the agency's research is likely to lead to new regulations.
"My guess, watching the CFPB operate so far, is that they're liable to conclude that they want to take action to limit arbitration in some manner," said Oliver Ireland, a lawyer at Morrison Foerster who represents financial institutions.
But over the last few months, industry observers have been relatively pleased with they have seen from the consumer bureau.
Overseeing the arbitration study for the CFPB is Will Wade-Gery, a former Morrison Foerster lawyer who used to represent financial institutions. In addition, the consumer agency has retained Christopher Drahozal, a University of Kansas law professor who is not regarded as having any particular agenda, as a consultant on the research.
Ballard Spahr's Kaplinsky said: "I must say that before having had some discussions with people at the CFPB about the project, I was probably very skeptical about whether this would really be a fair study that they would conduct, whether it would be based on political data, or whether it would be based more on political leaning. And so far I've been impressed."
In comments submitted to the CFPB in June, the American Bankers Association, the Consumer Bankers Association and the Financial Services Roundtable argued that the benefits of arbitration to consumers should be compared to the benefits of class-action litigation. In other words, arbitration should not be evaluated in a vacuum.
Consumer groups such as the National Consumer Law Center asked the CFPB to examine different issues, including the fact that contracts often bind consumers to the arbitration process, but do not place the same restriction on the bank.
The CFPB has not publicly revealed the scope and structure of its study, nor has it released a timeline for the study's completion.
The agency's study comes at a time when the courts have generally been siding with corporations in disputes with consumers over the use of arbitration. In a 2011 decision, the Supreme Court ruled that an AT&T arbitration clause banning participation in class action suits was enforceable despite a state law that sought to negate such clauses.
This term, the high court is again hearing a case with high stakes for companies that use arbitration clauses. The case, which involves an effort by merchants to sue American Express on antitrust grounds, again hinges on whether an arbitration clause that bans class action suits is enforceable.