The U.S. Senate has just blocked a set of relatively new regulations from the Consumer Financial Protection Bureau that would have striped Wall Street of billions of dollars if consumers had sued.
On Tuesday, the vote that rolls back the consumer protections set in place after the financial crisis gave the industry one of its greatest wins since President Donald Trump took office.
The CFPB’s rules would have allowed disgruntled consumers to challenge their banks in court over what is written in the fine print. The agreements between banks and consumers usually include terms and conditions that are detrimental to the customer. One of those conditions is to settle any disagreements via arbitration, not the judiciary.
Arbitration means that an independent expert gets do decide who is right in a dispute, rather than a judge. The arbitration clauses also bar customers from joining class-action lawsuits.
The CFPB rule that the GOP-controlled Senate just rolled back would have killed arbitration clauses. In return, millions of customers would have been able to file a lawsuit against their bankers.
‘Wall Street Won’
The measure silently passed through the House, but in Senate the issue sparked a heated debate with many conservative Senators voicing concerns that the move would benefit disproportionately big banks. The debate lasted over four hours but ended in a tie-breaking vote to undo the CFPB rules. Vice President Mike Pence cast the decisive vote Tuesday around 10:00 p.m.
Tonight’s vote is a giant setback for every consumer in this country. Wall Street won and ordinary people lost,
the head of the CFPB, Richard Cordray, said after the vote.
Cordray accused Senate Republicans of giving birth to a “two-tiered justice system” where financial institutions can sue their customers in court, while customers are barred from returning the favor. Wall Street had argued for years that the CFPB rules would push credit card rates up and leave room for too many frivolous suits.
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