Walter Zalenski Quoted in American Banker Article, "How the Industry May Challenge CFPB's Arbitration Plan"
May 5, 2016
Walter Zalenski was quoted in Kate Berry's American Banker article, "How the Industry May Challenge CFPB's Arbitration Plan," on May 5, 2016.
The finance industry pushed back against a proposal by the Consumer Financial Protection Bureau Thursday that would ban arbitration clauses in consumer contracts, saying it will pave the way for a flurry of class-action lawsuits and result in higher prices for products and services.
The proposal drew criticism across the various affected industries, including most types of consumer lending with the exception of mortgages. Industry lawyers made it clear at a field hearing in Albuquerque, N.M. that they are expecting a fight.
The impact of the proposal on consumers is important and could be used to challenge the plan.
The Dodd-Frank Act gave the CFPB the authority to prohibit or impose limitations on the use of arbitration clauses if the bureau finds that such measures are "in the public interest" and "for the protection of consumers," and if the findings are consistent with its study.
Industry representatives have used the bureau's study to try to bolster their claims that arbitration is in the public interest, and that the CFPB's findings do not align with the proposal.
"A challenge to the proposed rule would come under the three prongs embedded in Dodd-Frank," said Walter Zalenski, a partner at BuckleySandler.