Big banks score win
Trump administration scraps consumer dispute rule
Call it a win for “the swamp.” U.S. President Donald Trump and Republicans in Congress handed Wall Street banks a big victory by effectively killing off a politically popular rule that would have allowed consumers to band together to sue their banks.
The 51-50 vote in the Senate, with Vice-president Mike Pence casting the deciding vote, means bank customers will still be subject to what are known as mandatory arbitration clauses. These clauses are buried in the fine print of nearly every checking account, credit card, payday loan, auto loan or other financial services contract and require customers to use arbitration to resolve any dispute with his or her bank. They effectively waive the customer’s right to sue.
The banking industry lobbied hard to roll back a proposed regulation from the Consumer Financial Protection Bureau that would have largely restricted mandatory arbitration clauses by 2019. Consumers would have been allowed to sue their bank as a group in a class-action lawsuit. Individual consumers with individual complaints would still have to use arbitration under the rules.
Trump is expected to sign the Senate resolution into law, overturning yet another Obama-administration initiative.
The Consumer Financial Protection Bureau’s rules were politically popular. A poll done by the Gop-leaning American Future Fund found that 67 per cent of those surveyed were in favour of the rules, including 64 per cent of Republicans. Other polls on the subject show similar levels of support.
The overturn marks a significant victory for Wall Street.
“(The) 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,” Consumer Financial Protection Bureau director Richard Cordray, who was appointed by president Barack Obama, said in a statement.