CFPB’s Arbitration Rule No Favor for Consumers: New at Reason

When it comes to identifying the worst government agency, it’s hard to pick just one. It’s equally hard not to immediately think of the Consumer Financial Protection Bureau. There’s just something particularly off-putting about an agency that is so self-righteous in trumpeting its virtuous defense of consumers but nevertheless keeps finding ways to make them worse off.

Established in 2010 as part of Dodd-Frank, the CFPB didn’t take long to become notorious. One of its first acts was to completely and lavishly renovate its own headquarters—which, in typical Washington fashion, succumbed to ever-rising cost estimates. It then began participating in Operation Choke Point, an Obama-era attempt to strong-arm banks into closing the accounts of legal businesses that happen to operate in markets—such as firearms and tobacco—disfavored by politicians.

The CFPB also has waged a relentless war against small-dollar lenders who service a poorer clientele than traditional lenders, all while saddling conventional banks with costly new regulations. It’s little wonder then that since the CFPB was created, free checking accounts have been on the decline and credit for the poor has been harder to find.

The latest example of CFPB overreach comes in the form of a rule prohibiting financial services companies from including binding arbitration clauses in their contracts. This is a misguided decision for several reasons, writes Veronique de Rugy.

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