Lawsuit threat looms for US ABS
The Consumer Financial Protection Bureau (CFPB) has passed a rule on Monday to eliminate arbitration clauses, which stop consumers bringing class action lawsuits, in a move which could hurt the US securitization market and cause more legal trouble for the big banks. But Republicans have dug in and vowed to fight the rule.
The new rule applies to the major markets for consumer financial
products and services overseen by the CFPB, including those that lend money,
store money, and move or exchange money. Existing legislation already bans
arbitration clauses in the residential mortgage market.
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