CFPB Director Richard Cordray yesterday sent a letter to President Trump asking him to uphold the Bureau’s arbitration rule even though the Senate recently joined the House in authorizing a repeal of the rule under the Congressional Review Act.

Director Cordray’s letter states that without the arbitration rule, military service members will “get cheated out of their hard-earned money and be left helpless to fight back.”   That is not the case, and he knows it.  First, as discussed in the arbitration rule and as we have previously clarified, the Military Lending Act already regulates the use of arbitration agreements in most consumer credit contracts entered into by active-duty servicemembers and their dependents.  Therefore, it will not be affected by repeal of the CFPB rule.

Second, further contradicting his letter, Director Cordray acknowledged in the arbitration rule that arbitration is no more harmful to military service members than litigation: “Neither the [CFPB’s consumer arbitration] Study nor the commenters offered evidence demonstrating that individual arbitrations involving servicemembers and their families are inferior to individual litigation in terms of remedying consumer harm or unique from arbitration involving non-servicemembers.”

Director Cordray’s letter to the President omitted both of these important points.  The letter should be disregarded by the President as he prepares to sign H.J.Res.111 into law.