Tag Archives: Kings

Arbitration and the Common Man

Posted on by
photo by Eric Koch

Arthur Miller

Arthur Miller, the playwright who brought us Death of A Salesman, wrote an essay titled Tragedy and The Common Man. It opens,

In this age few tragedies are written. It has often been held that the lack is due to a paucity of heroes among us, or else that modern man has had the blood drawn out of his organs of belief by the skepticism of science, and the heroic attack on life cannot feed on an attitude of reserve and circumspection. For one reason or another, we are often held to be below tragedy-or tragedy above us. The inevitable conclusion is, of course, that the tragic mode is archaic, fit only for the very highly placed, the kings or the kingly, and where this admission is not made in so many words it is most often implied.

When I read the financial services industry’s critique of the CFPB’s proposed rule regarding Arbitration Agreements, it sounds like they believe that litigation, like tragedy “is archaic, fit only for the very highly placed, the kings or the kingly . . .”

The U.S. Chamber of Commerce has criticized the CFPB for proposing this rule because it will, according to them,

cause significant harm to the very consumers it is supposed to protect. The regulation will effectively eliminate the ability of consumers to use arbitration to seek redress for allegedly improper late fees, overdraft fees, or other small individualized claims that they cannot otherwise resolve with their financial service companies’ customer service departments. A “solution” in search of a problem, the bureau’s rule would replace arbitration — a consumer friendly system that is fast, convenient, and inexpensive — with America’s broken class action system. That’s great for class action plaintiffs’ attorneys but a bad deal for consumers.

It sounds to me like the Chamber believes that the consumer is below litigation-or litigation is above them and should be reserved for the kingly alone.

The fact remains, however, that the Chamber has pushed for mandatory arbitration because it is good for the large corporations who count themselves among its members.  And, in fact, the proposed rule would not eliminate the “ability of consumers to use arbitration;” rather, it would prohibit financial services corporations from using arbitration agreements “to bar the consumer from filing or participating in a class action . . .” (Proposed Rule at 1)

You can be sure that the financial services industry will be commenting broadly and deeply on this rule. Those who care about consumer protection from a policy perspective should be sure to put in their two cents too.  Comments are due in early August. so get crackin’.

Settling NY Foreclosures

Posted on by

Three legal services providers issued Stalled Settlement Conferences: A Report on Residential Foreclosure Settlement Conferences in New York City. The report opens,

New York has coped with the foreclosure crisis by implementing a pioneering settlement conference process administered by the court system, designed to promote negotiation of affordable home-saving solutions. These conferences present a remarkable opportunity for lenders and borrowers to meet face-to-face in a court supervised settlement conference at which creative solutions can be forged, and have allowed thousands of New Yorkers to avert foreclosure. But banks routinely flout the law by appearing without required information or settlement authority, causing delays that cost borrowers money and can make home-saving settlements impossible. The process can be far more effective, and less prone to delay, if the courts rigorously enforce the requirements of the settlement conference law, as this report recommends.

Notwithstanding media reports about rebounding real estate markets, New York remains mired in a foreclosure crisis. In fact, in 2013 foreclosure cases represented approximately one third of the judiciary’s civil case load. New York State’s courts experienced a significant increase in foreclosure fi lings during 2013, with the pending inventory increasing more than 16% in 2013, with over 84,000 foreclosure cases pending as of the last report issued by the judiciary, and with 44,035 projected new filings for calendar year 2013 (representing an increase of nearly 20,000 new filings over 2012). (2)

This is clearly an advocacy document, but it is also clear that it is documenting a real problem, one that has cropped up time after time in judicial decisions. It may, however, go too far when it states that “banks and their lawyers themselves are largely responsible for prolonging the process.” (3) In fact, NY’s foreclosure process was longer than most before the mandatory conferences were implemented and remain long even as other jurisdictions adopt similar requirements.

Nonetheless, lenders should comply with the letter and spirit of the law. The report advocates for courts to “vigorously enforce the settlement conference law and deter banks from violating it by penalizing parties who appear in court without the authority and information needed to negotiate in good faith.” (2) Seems like a pretty reasonable recommendation to me.