Rules made to be broken

In the Elections Have Consequences Dept.

“Honesty is the best policy, when there is money in it.” — Mark Twain

SOMETHING big happened between May 2016 and this week. It’s called an American presidential election. It comes around every four years, and, at least in this country where the presidency means something, those elections have consequences. Sometimes big consequences.

For example No. 852, take last year’s rule that would have made it easier to sue your bank. (Just what this country needs. More litigation.)

In the summer of President Obama’s last year in office, the government outfit called the Consumer Financial Protection Bureau wanted to ban arbitration clauses between you and your bank, your credit card company, and other financial concerns you may deal with. Those clauses are often written into your agreements with lenders so that, in case of disputes, you’d go to arbitration instead of the courtroom. These agreements have worked for many people for many years, so of course the government had to “improve” things.

The Consum. Fin. Pro. Bureau wanted to make it easier for lawyers to create class-action lawsuits, targeting banks. It was all a part of the Obama administration’s theory that the government knows what’s best for all of us and should protect us from our own ignorance. The cheering you heard last summer came from class-action lawyer offices all over the country. They were dreaming of big paydays.

(As always, none of that money was coming out of thin air. Banks and credit card companies were going to have to pass the cost on to you, Gentle Reader, each time you opened an account. But what, trial lawyers worry?)

But this week Senate Republicans voted to strike down the Obama-era rule. Well, most Senate Republicans. The vice president had to break a 50-50 tie, but that’s a big part of his job these days.

To quote that font of conservative right-wing propaganda, the New York Times, in Wednesday’s editions: “The rule, five years in the making, would have dealt a serious blow to financial firms, potentially exposing them to a flood of costly lawsuits over questionable business practices.”

Better if any “questionable business practices” went to arbitration. It doesn’t cost nearly as much as filing a lawsuit.

THE REPUBLICANS in the Senate have now sent this rule change to President Trump, who is expected to sign the legislation. (The House passed their bill earlier.)

This action will probably save millions, and possibly billions, in legal fees over the years, which means that ultimately consumers won’t be on the hook for those costs.

Democrats in the Senate and other government types who think they know best—including the director of the Consumer Financial Protection Bureau—call this change a “gift to financial institutions.”

Perhaps. But then again, many Americans do business with those financial institutions, and when they get a break, so do many Americans. Would it have been better to give another type of “gift” to class-action lawyers?

Some of us have a hard time remembering the last time that class-action lawyers gave us a good deal on a loan.