FINAL TERM PAPER

Integrating Values - The Legality, Morality, and Community Welfare of The CFPB Arbitration Rule

Abstract

This report will focus on the Consumer Financial Protection Bureau (CFPB) arbitration rule. This is a rule that bars financial companies from using arbitration clauses so that consumers should be prevented from pursuing their legal rights in court. This report will examine the reason for this agency's foundation and the basis on which this rule was formed. The legal applications of the arbitration would be discussed under rulemaking and adjudication. The ethical challenges that the rule would undergo would be explained in further sections regarding legal positivism and utilitarianism theory. Another similar theory of own choice would be presented for further elaboration to decide the ethicality of arbitration. Community welfare would be investigated for the agency's rule and whether it provides well-being and empowerment. A conclusion with recommendations would be provided so that maximized happiness for numerous stakeholders could be ensured.

Table of Contents

Introduction 3

Background Information Regarding Topic 5

Legal Section 7

Introduction to Legal Section 7

Statement of Relevant Legal Principles and Rules of Law 9

Legal Conclusion 10

Ethics Section 11

Introduction to Law and Ethics 11

Evaluation of Agencys Rule under Utilitarianism Ethical Theory 14

Evaluation of Agencys Rule under One More Ethical Theory 17

Personal Thoughts on the Agencys Rule 18

Community Welfare Section 20

Conclusion 22

References 23

Integrating Values - The Legality, Morality, and Community Welfare of

The CFPB Arbitration Rule

Introduction

The law and ethics are interconnected since the violations of ethical behaviors need legal enforcements for their deterrence. The standards of behaviors are set by the law and its legal jurisdictions so that ethical behaviors are observed within the organization and the individual level. It becomes difficult to determine under what circumstances particular actions are considered ethical that might directly affect the public. Ethical management is crucial for not only economic profits but society at large. Business ethics are also intertwined with the business dealings with the world, involving all stakeholders where dealings with one stakeholder might have an indirect and unintentional effect. The concern rises for human morality, vice and virtue, and wrongdoing and fairness.

This analytical paper would be a "3 value" analysis of law, ethics, and community welfare. When business or agency ethics are discussed, the set of rules that define what is right and wrong are highlighted since a culture, grouping of attitudes and feelings are determined as rightfully ethical within a working place. If a conflict among these is witnessed, it creates a climate of clashing of interests between the stakeholders, bribes, a battle of loyalty and integrity. The ethical actions are also stretched to the arena of social responsibility since the society where a business or agency operates should be answerable for the community's welfare. Social responsibility is the compulsion for the policy or decision-makers to take actions that would impact welfare and improvements (Singh & Singh, 2013).

The current topic of the paper, which is the arbitration rule of Consumer Financial Protection Bureau (CFPB) and its deactivation from the US government so that consumers cannot file lawsuits against the banks or any relevant financial intuitions if they experience any illegal actions, is the highpoint for the analysis. CFPB consolidated federal consumer protection responsibilities launched by the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 (Copeland, 2010). On July 10, 2017, CFPB proclaimed a new rule under which the use of mandatory arbitration clauses for seeking justice in the court by the common public was barred from being applicable (Swanson, 2017). The rule's main purpose was to allow the consumer to use lawsuits against the companies, especially consumer financial products like credit…

Running head: FINAL TERM PAPER

FINAL TERM PAPER

Integrating Values - The Legality, Morality, and Community Welfare of The CFPB Arbitration Rule

Abstract

This report will focus on the Consumer Financial Protection Bureau (CFPB) arbitration rule. This is a rule that bars financial companies from using arbitration clauses so that consumers should be prevented from pursuing their legal rights in court. This report will examine the reason for this agency's foundation and the basis on which this rule was formed. The legal applications of the arbitration would be discussed under rulemaking and adjudication. The ethical challenges that the rule would undergo would be explained in further sections regarding legal positivism and utilitarianism theory. Another similar theory of own choice would be presented for further elaboration to decide the ethicality of arbitration. Community welfare would be investigated for the agency's rule and whether it provides well-being and empowerment. A conclusion with recommendations would be provided so that maximized happiness for numerous stakeholders couldbe ensured.

Table of Contents

Introduction 3

Background Information Regarding Topic 5

Legal Section 7

Introduction to Legal Section 7

Statement of Relevant Legal Principles and Rules of Law 9

Legal Conclusion 10

Ethics Section 11

Introduction to Law and Ethics 11

Evaluation of Agencys Rule under Utilitarianism Ethical Theory 14

Evaluation of Agencys Rule under One More Ethical Theory 17

Personal Thoughts on the Agencys Rule 18

Community Welfare Section 20

Conclusion 22

References 23

Integrating Values - The Legality, Morality, and Community Welfare of

The CFPB Arbitration Rule

Introduction

The law and ethics are interconnected since the violations of ethical behaviors need legal enforcements for their deterrence. The standards of behaviors are set by the law and its legal jurisdictions so that ethical behaviors are observed within the organization and the individual level. It becomes difficult to determine under what circumstances particular actions are considered ethical that might directly affect the public. Ethical management is crucial for not only…

Running head: FINAL TERM PAPER

FINAL TERM PAPER

Integrating Values - The Legality, Morality, and Community Welfare of The CFPB Arbitration Rule

Abstract

This report will focus on the Consumer Financial Protection Bureau (CFPB) arbitration rule. This is a rule that bars financial companies from using arbitration clauses so that consumers should be prevented from pursuing their legal rights in court. This report will examine the reason for this agency's foundation and the basis on which this rule was formed. The legal applications of the arbitration would be discussed under rulemaking and adjudication. The ethical challenges that the rule would undergo would be explained in further sections regarding legal positivism and utilitarianism theory. Another similar theory of own choice would be presented for further elaboration to decide the ethicality of arbitration. Community welfare would be investigated for the agency's rule and whether it provides well-being and empowerment. A conclusion with recommendations would be provided so that maximized happiness for numerous stakeholders could be ensured.

Table of Contents

Introduction 3

Background Information Regarding Topic 5

Legal Section 7

Introduction to Legal Section 7

Statement of Relevant Legal Principles and Rules of Law 9

Legal Conclusion 10

Ethics Section 11

Introduction to Law and Ethics 11

Evaluation of Agencys Rule under Utilitarianism Ethical Theory 14

Evaluation of Agencys Rule under One More Ethical Theory 17

Personal Thoughts on the Agencys Rule 18

Community Welfare Section 20

Conclusion 22

References 23

Integrating Values - The Legality, Morality, and Community Welfare of

The CFPB Arbitration Rule

Introduction

The law and ethics are interconnected since the violations of ethical behaviors need legal enforcements for their deterrence. The standards of behaviors are set by the law and its legal jurisdictions so that ethical behaviors are observed within the organization and the individual level. It becomes difficult to determine under what circumstances particular actions are considered ethical that might directly affect the public. Ethical management is crucial for not only economic profits but society at large. Business ethics are also intertwined with the business dealings with the world, involving all stakeholders where dealings with one stakeholder might have an indirect and unintentional effect. The concern rises for human morality, vice and virtue, and wrongdoing and fairness.

This analytical paper would be a "3 value" analysis of law, ethics, and community welfare. When business or agency ethics are discu....... of attitudes and feelings are determined as rightfully ethical within a working place. If a conflict among these is witnessed, it creates a climate of clashing of interests between the stakeholders, bribes, a battle of loyalty and integrity. The ethical actions are also stretched to the arena of social responsibility since the society where a business or agency operates should be answerable for the community's welfare. Social responsibility is the compulsion for the policy or decision-makers to take actions that would impact welfare and improvements (Singh & Singh, 2013).

The current topic of the paper, which is the arbitration rule of Consumer Financial Protection Bureau (CFPB) and its deactivation from the US government so that consumers cannot file lawsuits against the banks or any relevant financial intuitions if they experience any illegal actions, is the highpoint for the analysis. CFPB consolidated federal consumer protection responsibilities launched by the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 (Copeland, 2010). On July 10, 2017, CFPB proclaimed a new rule under which the use of mandatory arbitration clauses for seeking justice in the court by the common public was barred from being applicable (Swanson, 2017). The rule's main purpose was to allow the consumer to use lawsuits against the companies, especially consumer financial products like credit card companies and financial institutions, for trying them in court for any of their wrongful deeds (Hayashi, 2015). However, after the government revoked the arbitration rule, the former CFPB Director Richard Cordray pled for the rule to be made effective again. He believed that the ordinary would lose their vocal power for speaking against the companies who do them wrong. The common public should be given a chance to pursue their legal rights and gain what is rightfully theirs.

The topic's significance is directly related to the social responsibility of the business firms and agencies for society's welfare. Consumers were barred from voicing their opinions regarding the banking firms' illegal actions, and credit card companies since the loss of the public's money would not be tried in court. Although proponents of this revocation of the arbitration rule by the government say that the government has saved the citizens and the financial companies from wasting a huge number of pennies on lawsuits, it had put a burden on the general public for remaining silent if the firms have committed any wrong act against them.

Background Information Regarding Topic

A recession and financial crisis in the late 2000s forced Congress to pass the Protection Act (Legislative Attorney, 2014). President Barack Obama appointed Warren as the President's Assistant and the Secretary of the Treasury's Special Advisor on an official basis for the Consumer Financial Protection Bureau (CFPB). The said agency was established on July 21, 2011, with its main focus on mortgages, credit cards, and student loans. Although the bureau operated independently, it was still funded by the United States Federal Reserves under the authority of the US Treasury Department. The bureau is responsible for devising rulesfor financial institutions for both banks and non-bank institutions. It also performs the obligations of evaluating markets, receiving and reviewing consumer complaints about providing fairness in financial matters, and giving impartiality for consumers' financial products.

The agency is currently run by only one Director, Kathy Kraninger, who was nominated on June 16, 2018, by President Donald Trump. The current Deputy Director is Tom Pahl. The United States President nominates the director and other essential agency heads. Most people currently working at CFPB get their jobs by applying to the job opening at a certain time via the CFOB official website. The applicants post their resumes on the website by keeping in mind the job posting's minimum qualifications. It takes time to assign federal jobs to the applicants since the agency commits to being fair to all applicants and carefully reviews their employment history. The jobs are allotted through the equal employment opportunities rule so that a diverse workforce is included, regardless of race, ethnicity, color, gender, transgender status, or gender non-conformity (Consumer Financial Protection Bureau, n.a.).

The link to the administrative agency's home page is https://www.consumerfinance.gov/. Under scrutiny was the CFPB arbitration rule that allowed the common public to use lawsuits against the financial institutions that did nay wrong with the citizens. There has been a dispute on the fairness of the rule. The findings from the study conducted by CFPB revealed that seven out of eight renowned mobile wireless providers that protected 99.9% of the total subscribers had a compulsory arbitration clause in their agreements. Beyond 90% of the credit card issuers also have arbitration phrases in their indentures with consumers. A study conducted by CFPB found that consumers filed approximately 600 arbitration cases and 1200 federal lawsuits each year on average (Consumer Financial Protection Bureau, 2015). Between the years 2010 and 2012, six different consumer finance markets were victimized by filing cases against them. The arbitrators were forced to award consumers for losses up to $175,000. Under this arbitration rule, an estimated 32 million consumer was eligible for relief by the financial