Acting Comptroller of the Currency Keith Noreika has asked the Consumer Financial Protection Bureau to delay publishing its final arbitration rule in the Federal Register, citing concerns about how it will impact the safety and soundness of banks.
Noreika, who was appointed just over two months ago, previously raised concerns to CFPB Director Richard Cordray in a letter a week ago, but is now seeking data and the methods used to develop the consumer agency's rule so that the OCC can conduct its own review. The rule is slated to go into effect roughly eight months after its publication.
"I further request that you delay publication of the final rule in the Federal Register until my staff has had a full and fair opportunity to analyze the CFPB data so that I am able to fulfill my safety and soundness obligations," Noreika wrote. "As the prudential regulator for the federal banking system, the OCC should be granted the opportunity to conduct an independent review of the CFPB data to determine the safety and soundness implications of the final rule. I will make every effort to expedite that review."
The CFPB did not immediately comment.
Republicans have threatened to kill the arbitration rule using the Congressional Review Act, an obscure law that allows Congress to reject an agency's regulation by a majority vote within 60 legislative days of its release. But the packed legislative agenda and general uncertainty of the chances for any legislation have forced Republicans to dual-track their efforts by laying the groundwork for regulators to potentially strike down the rule.
The Financial Stability Oversight Council could potentially veto a CFPB rule with a two-thirds majority vote among the 12 regulators. But first an FSOC member agency must file a petition no later than 10 days after the publication of a rule in the Federal Register.
Bryan Hubbard, an OCC spokesman, could not say whether the OCC had ever requested that another agency delay the publication of a rule so it could conduct its own analysis. Hubbard also could not say whether anyone at the OCC had previously raised safety and soundness concerns about class-action lawsuits against financial companies or if the agency had ever intervened in a class-action settlement by a financial firm.
The CFPB's arbitration rule would prohibit financial firms from requiring that consumers arbitrate disputes through mandatory arbitration clauses. The rule would allow consumers to band together to form class-action suits.
Cordray responded to Noreika's first letter, sent on July 10, by claiming the OCC's request for data did not meet statutory requirements. The OCC has had more than a year to respond to the regulation, which was proposed rule in May 2016. The CFPB released a 728-page study on arbitration in March 2015.
"At no time during this process did anyone from the OCC express any suggestion that the rule that was under development could threaten the safety and soundness of the banking system," Cordray wrote.
The rule would cost the financial industry roughly $2.6 billion over five years, according to the CFPB's own study. The industry has claimed the cost of defending class actions would be twice that amount.
The Dodd-Frank Act gave the CFPB the authority to study arbitration agreements and to prohibit or restrict their use if the bureau finds it is in the public interest and for the protection of consumers.