Senate nixes rule that helped people sue big banks

The White House is welcoming a congressional measure killing the ability of millions of Americans to band together to sue bank or credit card companies to resolve financial disputes in a major win for Wall Street.

The Senate narrowly voted late Tuesday night to nullify the rule, with Vice President Mike Pence casting the final vote to break a 50-50 tie. The measure now goes to President Donald Trump for his signature.

“President Donald J. Trump applauds the Congress for passing,” the resolution, the White House said in a statement shortly after the vote that highlighted its own Treasury Department report criticizing the rule.

The banking industry had been lobbying hard to roll back the regulation from the Consumer Financial Protection Bureau. The bureau had moved to ban most types of mandatory arbitration clauses found in the fine print of agreements consumers often enter into when opening a checking account or getting a credit card.

The vote reflects the effort of the Trump administration and congressional Republicans to undo regulations that the GOP argues harm the free market.

Democratic lawmakers said the CFPB’s rule would have given consumers more leverage to stop companies from financial wrongdoing. They cited the sales practices at Wells Fargo and the security breach at credit company Equifax as examples of misdeeds protected through forced arbitration.

“So who does forced arbitration help? Wall Street banks and other huge corporations that never pay the price for cheating working people,” said Sen. Sherrod Brown, D-Ohio.

Richard Cordray, director of the consumer bureau, said: “Tonight’s vote is a giant setback for every consumer in this country. Wall Street won and ordinary people lost. This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company.”

Republicans said the arbitration system has worked wonderfully for consumers. They said the payouts for the average consumer in arbitration cases are generally much larger and come more quickly than when compared to the relief gained through class-action lawsuits.

Steve Helber / Associated Press Consumer Financial Protection Bureau Director Richard Cordray, center, listens to comments during a panel discussion in Richmond, Va., last year.