Under the cover of nightfall, the Senate voted to kill a rule allowing Americans to file class-action lawsuits against financial institutions, instead of engaging in private arbitration with them.
Vice President Mike Pence cast the deciding vote after the Senate tied 50 to 50 in what is being hailed as a major victory for the financial industry over everyday Americans.
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Whereas the rule, created by the Consumer Financial Protection Bureau, was praised by Democrats and consumer advocates, Republicans tenuously claimed that it would “unleash a flood of class-action lawsuits, and the cost of fighting those suits would be passed on to consumers.” In other words, scared by the prospect that common-sense litigation against a financial institution’s nefarious activities may result in high legal costs for said nefarious activities, Republicans have chosen instead to castrate consumers.
The CFPB, for its part, argued that the rule helped hold banks accountable for their wrongdoing. For example, Wells Fargo had previously relied on arbitration clauses to block class-action lawsuits for the slew of unauthorized accounts that were opened up in customers’ names without consent. In total, more than 3.5 million accounts were created; while fines were levied against the banks, arbitration clauses – an issue that was rectified with the CFPB’s new rule – precluded consumers from joining together for a class action lawsuit.
Equifax, whose security flaws resulted in a massive, unprecedented breach of its customers’ private data, also relied on arbitration clauses to protect itself from class-action lawsuits.
Senator Sherrod Brown (D-OH) castigated Republicans for betraying everyday Americans.
“By voting to take rights away from customers, the Senate voted tonight to side with Wells Fargo lobbyists over the people we serve,” he said.
Republicans may be publicly hailing their vote tonight as a victory against “class-action lawyers,” but the real victory was delivered to the financial institutions who can act without fear of any significant consequence for their actions.