Public Support for the CFPB and its Arbitration Rule — Is The Evidence Clear?
A recent poll — conducted by Lake Research Partners and Chesapeake Beach Consulting on behalf of Americans for Financial Reform and the Center for Responsible Lending — appears to show substantial public support for the Consumer Financial Protection Bureau (CFPB) and a number of its recent regulatory initiatives. The published poll results reflect, among other things, that:
- 91% of Americans believe that it is important to “regulate financial services and products to make sure they are fair for consumers,” and substantial majorities support “tougher rules and enforcement” and increased regulation of financial companies;
- 74% of Americans support the 2010 Dodd-Frank act, and an almost equal number (73%) support the CFPB; and
- Most Americans support recent CFPB regulatory initiatives, including the CFPB’s ban on mandatory pre-dispute arbitration clauses in contracts for consumer financial services (66%).
This last result is particularly notable, as it could influence Congressional willingness to overrule the Bureau’s arbitration rule pursuant to the Congressional Review Act (see our client alert, at page 3, for more details).
But the poll’s results are not as unambiguous as they seem at first glance, and policymakers should be cautious in relying on them. Some of the support for the CFPB and CFPB policies reflected in the results could be ascribed to the way the pollsters asked their questions.
For example, according to footnote 7 of the polling memorandum, prior to being asked whether they support the CFPB, respondents were told that:
“The Consumer Financial Protection Bureau, or CFPB, is the first federal agency whose focus is protecting consumers when they use mortgages, credit cards, bank accounts, and other financial products and services. Its mission includes preventing deceptive, unfair and abusive lending and collection practices by banks and other companies.”
This text provides a selective and favorable description of the CFPB. In particular, calling it the “first” (and, implicitly, the sole) federal agency to focus on consumer financial protection may have influenced poll respondents, who may well not have known that consumer protection laws were (and continue to be) enforced by bank regulatory agencies, the Federal Trade Commission, and State authorities.
Elsewhere, the pollsters did not always succeed in asking balanced questions. For example, footnote 9 of the polling memorandum reflects that, in relation to the CFPB’s arbitration rule, respondents were asked whether they were more likely to believe that the rule would:
- benefit consumers and punish “Big Banks and payday lenders that commit fraud and break the law”; or
- promote frivolous lawsuits that benefit “greedy trial lawyers.”
But the policy debate over the arbitration rule cannot be reduced to an (un)popularity contest between caricatures of bankers and lawyers. The poll did not test the key policy arguments made by opponents of the arbitration rule, such as that arbitration is a quicker and cheaper alternative to court litigation, which can be prohibitively expensive for individual consumers.
Consumer views on the appropriate level of consumer financial regulation are important and should be given consideration. A more useful approach to gauging consumer views, however, may be to ask consumers who have had specific, recent experiences with consumer financial products about those experiences and whether and how they might be improved by regulation. For example, commenters on the CFPB’s arbitration rule asked the CFPB to poll consumers who had recently participated in arbitrations against banks about their experiences. The Bureau declined to do so. Concrete questions about actual consumer experiences may be less susceptible to framing biases in polling questions and would alleviate the need for pollsters to supply respondents with nutshell explanations of complex and nuanced policy issues that may influence poll responses.