Passed in the wake of the financial crisis of 2008, the Dodd-Frank Act (named for two controversial members of Congress) was a classic case of a cure worse than the disease.

One of its more repugnant effects was the creation of the soothingly named Consumer Financial Protection Bureau (CFPB), which was never intended to protect the finances of consumers, but instead to create enrichment opportunities for payday plaintiffs attorneys who typically support Democrat politicians.

Just this past July, Obama-appointed CFPB Director Richard Cordray announced a rule regulating the use of arbitration clauses in contracts offered to consumers by the financial services industry.

“These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together,” Cordray proclaimed to a Congressional committee two years ago, ignoring the results of his own study, which showed no positive results for consumers from class action suits.

Plaintiffs attorneys hate arbitration – and contract clauses mandating it – because arbitration limits their opportunities to intercede in disputes and chase big payoffs for themselves alone.

“The CFPB has decided to overstate the value of class actions for consumers, contrary to the CFPB’s own data in its study, which demonstrates unequivocally that the only real beneficiaries of class action litigation are the plaintiffs’ class action lawyers,” says corporate attorney Alan Kaplinsky, who pioneered the use of pre-dispute arbitration provisions in consumer contracts. 

“This rule is just a large gift for class action lawyers.”

About the same time Cordray was announcing this “large gift” Pennsylvania Attorney General Josh Shapiro was announcing a gift of his own: the creation of a state-based “Consumer Financial Protection Unit” (CFPU), with a former member of the CFPB named to run it.

Shapiro's cronies get a gift, but guess who pays for it.

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