Americans are losing the battle for consumer protections against banks
“The Senate voted Tuesday night to kill a controversial rule that would have allowed Americans to file class-action suits against banks instead of being forced in many cases into private arbitration.”
—“Senate votes to kill new rule allowing class-action lawsuits against banks after Pence casts deciding vote,” Los Angeles Times, 10/25/17
In the wake of scandals by financial giants Wells Fargo and Equifax, everyday consumers stand to lose more protections against shady practices. A new Consumer Financial Protection Bureau rule, which would have held large banks more accountable by allowing Americans to file class-action lawsuits, was overturned by a vote in the Senate mostly along party lines, with Vice President Mike Pence casting the tiebreaker. President Trump is expected to sign the measure into law.
This rule, which would have taken effect in 2019, was originally seen as a significant win for the millions of consumers who have been harmed by industry abuses and deceitful practices, including the 3.5 million who found that Wells Fargo had opened unauthorized accounts in their name and the more than 145 million who were affected by the Equifax breach. By denying average people the power to fight financial giants court, we are essentially giving these institutions “get out of jail” cards for their bad behavior because consumers are unlikely to hire a lawyer to resolve an individual, small-dollar dispute. In a two-year examination of about 1,000 cases, the CFPB found that arbitrators ruled in consumers’ favor just 78 times, awarding about $360,000 total. By contrast, class-action lawsuits bring hundreds of millions of dollars in relief each year to millions of consumers.
While the CFPB remains intact, its future under the present administration is uncertain. The Senate has yet to consider Rep. Jeb Hensarling’s so-called Financial Choice Act, which passed in the House in June and which would dismantle much of the consumer agency whose founding was spearheaded by the great Elizabeth Warren. I have written at great length about why a strong CFPB is crucial for Americans, and urge you to call your representatives today and emphasize how important the bureau is for basic consumer protections.