Yesterday, the Consumer Financial Protection Bureau (CFPB) introduced a ballsy regulatory move in the form of a new proposed rule that will hopefully “unravel a set of audacious legal maneuvers by corporate America that has prevented customers from using the court system to challenge potentially deceitful banking practices.” Financial firms have been using mandatory arbitration clauses in the “fine print” of contracts to shield them against their customers’ ability to pursue class action law suits, and this new rule demonstrates that the administration aims to put a complete end to the practice.

“It’s going to spell the end of arbitration,” said Alan S. Kaplinsky, a lawyer with the firm Ballard Spahr in Philadelphia, who pioneered the use of arbitration clauses to thwart class-action lawsuits and thus opposes the proposed rule. “It will lead to a huge upsurge in litigation and take away a benefit to consumers.”

The practice relies on customers not having the same degree of information (that’s what the “small print” is for) as the corporations they’re entering into a contractual agreement with, and this kind of information disparity is a systematic problem that we’ve been tackling at the Washington Monthly in a series of posts, including a trio by Lina Khan, and this one from Gilad Edelman. In fact, the “asymmetry of information” problem has been a theme running through our coverage in recent years, including our Big Lobotomy analysis of Congress and a group of articles on government written by Lee Drutman. In the next issue of our magazine, we’ll have another piece that touches on this issue written by Anne Kim. It’s on new regulations proposed by the CFPB on payday lenders, a predatory industry that offers desperate people a raw deal in exchange for quick cash.

It’s kind of fascinating to see how information asymmetry is at the heart of so many pressing issues. I thought the internet was supposed to fix this.

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Martin Longman is the web editor for the Washington Monthly. See all his writing at