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October 31st, 2017

Cordray’s Veto Letter to Trump a ‘Last-Gasp’ Effort to Save Possible Gubernatorial Campaign

Having Failed to Ban Arbitration Clauses, CFPB’s Director Now Admits Weakness of Misleading Arguments All Along

Noting that Consumer Financial Protection Bureau Director Richard Cordray has “sloppily revealed the falsity of long-running arguments against arbitration clauses in financial services contracts,” the American Tort Reform Association today called a newly reported letter from Cordray to President Trump “a desperate attempt to win back plaintiffs’ bar support for his possible gubernatorial run in Ohio.”

Many news outlets are reporting that Cordray’s letter to Trump urges the president to veto the congressional resolution which, finalized last week, killed the CFPB rule that would have banned mandatory arbitration clauses from financial services contracts and thus opened a new, multimillion-dollar line of business for wealthy class-action lawyers – some of the most reliably generous patrons of Mr. Cordray’s political party.

“This letter is not about charts or graphs or studies,” Cordray wrote to the president. “Instead, it is simply a personal appeal to you, asking you to uphold this rule” on behalf of consumers purportedly “cheated out of their hard-earned money” and “left helpless.”

But ATRA’s director of communications Darren McKinney pointed out that “Mr. Cordray had exuberantly if unconvincingly waved around CFPB’s misleading ‘charts, graphs and studies’ for years, making the false case that consumers lacked choice and that the litigation spurred by this anti-arbitration rule would not result in higher credit costs.

“Now, like Emily Litella, Mr. Cordray says, ‘Never mind,’” McKinney continued.?“Forget all that empirical stuff, Mr. President, and exercise your veto on the basis of populist emotion.”

McKinney cited his recent op-ed in the Wall Street Journal that additionally recounts how Cordray earlier this month, when trying to refute “crushing empirical criticisms” of the anti-arbitration rule by the Treasury Department and the Office of the Comptroller of the Currency, “blurted out in a letter to his chief Senate defender, Sherrod Brown (D-Ohio), that ‘roughly half’ of credit card-issuing big banks and ‘almost’ all community banks offering checking accounts do not require arbitration.

“Of course, this stunning admission flies in the face of class-action lawyers’ phony argument against arbitration: that consumers either have to sign away their right to sue or go without critical financial services.

“Needless to say, the plaintiffs’ bar isn’t happy with Mr. Cordray’s loose lips and is rumored to be having second thoughts about investing in his still anticipated run for governor in Ohio. After all, the expected GOP candidate there, state Attorney General Mike DeWine, is a longstanding friend to the trial lawyers, too, and at this point may be considered more dependable.

“So, Mr. Cordray’s snowball’s-chance letter to President Trump reads like a last-gasp effort to salvage both the CFPB’s rule and his own electoral future, the latter of which may not be very bright without a lot of campaign cash from trial lawyers,” McKinney concluded.