As the deadline approaches for Congress to try to nullify theCFPB's arbitration rule, the TrumpAdministration's fight against the regulation intensified Monday,as the Treasury Department issued a new report blasting theagency's decision to issue the rule.

“The Bureau failed to meaningfully evaluate whether prohibitingmandatory arbitration clauses in consumer financial contracts wouldserve either consumer protection or the public interest—its twostatutory mandates,” Treasury said in a new report.

CFPB officials dismissed the Treasury report.

“The report by the Treasury Department rehashes industryarguments that were analyzed in depth and solidly refuted in thefinal rule,” said agency spokesperson Samuel Gilford.

The report is the latest shot in the high-stakes battle over theCFPB's rule that would restict mandatory arbitration clauses infinancial contracts. The Office of the Comptroller of the Currencyalso has criticized the methodology the agency used to justify therule.

Acting Comptroller Keith Noreika, an attorney who representedfinancial institutions before taking the new position, and CFPBDirector Richard Cordray have engaged in a back-and-forth battleover the rule.

And credit unions have continued to try to convince senatorsthat the rule should not apply to them, said Ryan Donovan, CUNA'schief advocacy officer.

“Credit unions continue to highlight to the Senate that classaction litigation is not appropriate for the size and structure ofcredit unions.,” he said. “The CFPB did not take into accountthe different structure and history that credit unions havecompared with the largest banks on Wall Street, Donovan added.”

NAFCU officials said they too are meeting with stakeholders andkey Senators in an effort to raise awareness about the rule and itsimpact.

The CFPB issued the rule in July. It immediately was criticizedby the financial community as a costly and unnecessary regulation.The House has passed a resolution nullifying the rule under theCongressional Review Act. But the Senate has not acted on theresolution amid concern that Republican opponents of the rule don'thave the votes.

The resolution nullifying the rule only takes 51 votes in theSenate and it cannot be filibustered. Congress has 60 legislativedays after a final rule is issued to block its implementation. Bysome accounts, that means the Senate must act by mid-November toblock the arbitration rule.

As the deadline approaches, it still is unclear whether SenateRepublicans have the needed votes, said John McKechnie, seniorpartner at Total Spectrum.

“As recently as last week, Republican Senate Leadership wasn'tsure,” he said. “It will be interesting to see if theTreasury report persuades the unpersuaded.”

In a related development, Americans for Financial Reform, agroup that favors the rule, announced a digital advertisingcampaign in states where senators have been wavering in whether tosupport the CFPB plan.

The group announced it would be running the ads in Maine,Alaska, Louisiana and Arizona. They feature former customers ofWells Fargo Bank who were precluded from joining lawsuits againstthe bank because they had signed mandatory arbitrationagreements.

“Senators will be giving Wall Street and predatory lenders abrand-new get out of jail free card if they overturn the new CFPBrule restoring consumers right to hold financial companiesaccountable if they break the law,” said Lisa Donner, executivedirector of the group.

But Treasury is contending that the agency's methodology isfatally flawed. The department said that removing mandatoryarbitration agreements will generate more than 3,000 additionalclass action suits in the next five years, at a cost of more than$500 million in legal fees paid by businesses.

In most of class action suits, consumers are provided withlittle relief, while plaintiff law firms are richly rewarded,Treasury said.

“The Bureau has not made a reasoned showing that increasedconsumer class action litigation will result in a net benefit toconsumers or to the public,” Treasury concluded. “Based on theBureau's own data, it is far more likely that the Rule willgenerate massive economic costs—borne by businesses and consumersalike—that dwarf the speculative benefits of the Bureau's theorizedincrease in compliance.”

But Gilford said that mandatory arbitration agreements helpfinancial institutions avoid accountability.

“Our rigorous analysis of the costs and benefits of the rulefound that mandatory arbitration clauses allow companies to avoidaccountability for breaking the law and cost consumers billions ofdollars by blocking group lawsuits,” he said. “Banks, creditunions, and other companies file class action lawsuits to pursuejustice when they are harmed as a group, and our rule restoresconsumers' right to do the same. The Equifax and Wells Fargo casesshow how important it is for consumers to be able to band togetherto take legal action together. This report and similarindustry analyses fail to make the case for allowing companies tocontinue using these clauses to deny consumers their day incourt.”

Donovan said the Treasury report stresses a point that CUNA hasbeen trying to make.

“The Treasury report sheds light on the fact that the rule will'generate massive costs borne by businesses and consumers alike,”he said' “This is particularly true for credit union members, whoare directly impacted by class action litigation since the creditunion member-ownership structure means resources spent on costlylitigation come out of the pockets of members through the pooledresources of the membership.”

Several groups representing financial institutions also havefiled suit in federal court in Texas disputing the need for therule. Those groups, which does not include any credit unions, lastweek asked U.S. Circuit Judge Sidner Fitzwater of the NorthernDistrict of Texas to issue a temporary injunction blocking the CFPBfrom enforcing the rule.