10-25-2017, 11:24 AM
https://www.nytimes.com/2017/10/24/business/senate-vote-wall-street-regulation.html
Seems like they don't care about "the forgotten" people and only want to protect the interest of the business. Weird. (Just my opinion...of course.)
Quote:Senate Republicans voted on Tuesday to strike down a sweeping new rule that would have allowed millions of Americans to band together in class-action lawsuits against financial institutions.
The overturning of the rule, with Vice President Mike Pence breaking a 50-to-50 tie, will further loosen regulation of Wall Street as the Trump administration and Republicans move to roll back Obama-era policies enacted in the wake of the 2008 economic crisis. By defeating the rule, Republicans are dismantling a major effort of the Consumer Financial Protection Bureau, the watchdog created by Congress in the aftermath of the mortgage mess.
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.
For decades, credit card companies and banks have inserted arbitration clauses into the fine print of financial contracts to circumvent the courts and bar people from pooling their resources in class-action lawsuits. By forcing people into private arbitration, the clauses effectively take away one of the few tools that individuals have to fight predatory and deceptive business practices. Arbitration clauses have derailed claims of financial gouging, discrimination in car sales and unfair fees.
The new rule written by the consumer bureau, which was set to take effect in 2019, would have restored the right of individuals to sue in court. It was part of a spate of actions by the bureau, which has cracked down on debt collectors, the student loan industry and payday lenders.
The arbitration rule has sparked a political battle that has taken on broader significance in the new administration. Republicans latched on to the rule as a way to cast the agency as a player in the regulatory regime that was impeding business and the economy. Shortly after the rule was adopted in July, the U.S. Chamber of Commerce pointed to it as a “prime example of an agency gone rogue.”
In recent months, financial firms and their Republican allies in Congress mobilized to defeat the rule. Some credit unions and community banks also weighed in, lodging calls to lawmakers in their home states.
Under the Congressional Review Act, Republicans had roughly 60 legislative days to overturn the rule. The House passed its own resolution in July.
Wrangling the votes in the Senate was trickier. In the weeks leading up to the vote, Senator Lindsey Graham, Republican of South Carolina, who sponsored legislation to protect military members from being forced into arbitration, said he would not support a repeal of the rule.
Looking to head off a repeal, Democrats and consumer advocates branded the effort as a gift to financial institutions like Wells Fargo and Equifax. Both companies, in the face of corporate scandals, used arbitration clauses to try to quash legal challenges from customers.
The rule, Democrats argued, was precisely what was needed to protect the rights of vulnerable borrowers. Regulators and judges, including some appointed by Republican presidents, have also backed the position.
Class actions, they argue, are not just about the size of the payouts, which are typically spread out among a large group of people. They are also about pushing companies to change their practices. Large banks, for example, had to pay more than $1 billion to settle class actions beginning in 2009 that accused them of tweaking checking account policies to increase the amount of overdraft fees that they could charge customers.
“Tonight’s vote is a giant setback for every consumer in this country,” Richard Cordray, the director of the consumer bureau, said in a statement. “As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.”
The vote was a win for a party that has struggled to deliver on its legislative priorities. Last month, Senator Mitch McConnell of Kentucky, the majority leader, failed to drum up the support needed to overturn President Barack Obama’s signature health care law.
Mr. Graham and Senator John Kennedy of Louisiana broke with the Republicans to vote against the measure. But Senator John McCain of Arizona, whom some Democrats had hoped to sway, voted to overturn the rule. The measure now heads to President Trump, who is expected to sign it.
The consumer bureau has unusually broad authority — and autonomy from both the White House and Congress — to enforce existing federal laws and write new regulations, like the arbitration rule. That independence has rankled Republicans and other federal agencies.
In June, the Treasury Department issued a report accusing the agency of regulatory overreach and calling for Mr. Trump to have the right to remove its director. This week, the department weighed in directly on the arbitration rule, warning that the regulation could unleash frivolous lawsuits, costing financial firms an estimated $500 million in legal fees alone.
Republicans echoed those arguments on the floor of the Senate on Tuesday. Senator John Cornyn, Republican of Texas, rallied his peers, calling it “harmful regulation that imposes obvious costs and offers invisible benefits.” Like the Treasury report, he argued that class actions “enrich lawyers” at the expense of consumers.
The debate over the arbitration rule put Mr. Cordray, into an odd position of publicly bickering with other federal agencies.
After the Treasury report, Mr. Cordray sent a letter to Treasury Secretary Steven Mnuchin faulting the department for misrepresenting the bureau’s work. He also expressed surprise at the report, noting that during his agency’s work on arbitration, the Treasury “raised no issues or concerns with the bureau.”
The friction is intensifying as Mr. Cordray’s tenure at the bureau is ending. Appointed by Mr. Obama in 2012 to a five-year term, Mr. Cordray is widely expected to step down sooner to run for governor in Ohio.
Mr. Trump will then be free to install his own appointee, a move that is expected to defang what has been one of the financial industry’s most aggressive regulators.
The arbitration rule, in many ways, encapsulated the bureau’s work: It was independent and designed to fill a regulatory gap. The rule was the first major check on arbitration since a pair of Supreme Court decisions, in 2011 and 2013, enshrined its widespread use.
Emboldened by those decisions, more and more companies adopted the clauses. Today, it is hard to open up a checking account, rent a car, get cable service or check a loved one into a nursing home without agreeing to mandatory arbitration.
As arbitration clauses appeared in tens of millions of contracts, the consumer agency was specifically mandated to study arbitration under the Dodd-Frank financial law in 2010. That effort culminated in a 728-page report, released in March 2015, that challenged longstanding assumptions about arbitration.
The agency found that once blocked from suing, few people went to arbitration at all. And the results for those who did were dismal.
During the two-year period studied, only 78 arbitration claims resulted in judgments in favor of consumers, who got $400,000 in total relief.
The vote late Tuesday left many Democrats dismayed.
Senator Sherrod Brown, Democrat of Ohio, said the Republicans had betrayed ordinary Americans. “By voting to take rights away from customers,” he said, “the Senate voted tonight to side with Wells Fargo lobbyists over the people we serve.”
Seems like they don't care about "the forgotten" people and only want to protect the interest of the business. Weird. (Just my opinion...of course.)
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Your anger and ego will always reveal your true self.
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