The Consumer Financial Protection Bureau's (CFPB) rule abolishing "mandatory arbitration clauses" was released on July 10, and was immediately threatened by Republicans in Congress and President Donald Trump's administration.
Nevertheless, the GOP-controlled Senate voted 51-50 Tuesday on the side of the financial-services industry. "Big banks, the financial industry and their allies in Congress are trying to overturn the arbitration rule because it will deprive them of a means to rip off consumers with impunity".
Get a more complete view of the reasons numerous rule's detractors are citing and what arguments the bureau's leadership has put forth in its defense.
Wrangling the votes in the Senate was trickier.
Why are class-action suits important?
"Based on (the CFPB's) own data, it is far more likely that the rule will generate massive economic costs borne by businesses and consumers alike that dwarf the speculative benefits", the Treasury report says.
The Treasury does not call for the rule to be repealed or otherwise defeated, but the analysis will likely serve as ammunition for congressional Republicans and the business community who are attempting to undo it. Republicans in the U.S. Senate are now trying to garner enough support to pass a resolution that would repeal the rule, after a similar measure passed in the U.S. House. Senators from these states who vote against the rule are defying the wishes of their constituents by siding with big banks over consumers, FAN maintains.
The report is the latest salvo in an ongoing fight over the rule, opposed by the finance industry and many Republicans in Congress.
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Proponents of the action hailed it as a win against trial lawyers, a victory for community banks and a benefit to consumers who won't pin their hopes on class-action lawsuits that typically could bring winners less than $33 apiece.
Forced arbitration clauses are common in contracts for things like credit cards and vehicle loans, and banks argue that it is a quick way to settle disputes with consumers without going through drawn-out legal cases.
While the report criticizes the CFPB's new rules, it does not call for them to be repealed.
The CFPB "has been branded as a "rogue" regulator by Republicans and stands out as one of the few watchdogs still led by an Obama appointee, Richard Cordray". That followed another agency, the Office of the Comptroller of the Currency, which also claimed that the rule would raise legal costs for banks.
But Republican lawmakers and Trump's Treasury Department said that when customers join group lawsuits rather than try to resolve their disputes one at a time out of court, they wind up primarily benefiting one group in particular: trial lawyers. The petition bolsters recent survey findings from both progressive and conservative pollsters - as well as polls in Alaska, Arizona, Louisiana, Maine and OH - showing strong bipartisan support for protections from forced arbitration. They said arbitration makes it possible for a consumer to seek redress without making either party go through the the cost of litigation. They cited the sales practices at Wells Fargo and the security breach at credit company Equifax as examples of misdeeds protected through forced arbitration. Sherrod Brown, D-Ohio.
But in the wake of scandals involving financial giants Equifax and Wells Fargo, both of which tried to use the arbitration clauses to avoid class-action lawsuits, the subject took on sudden political relevance.
The issue became particularly heated after the recent Wells Fargo and Equifax scandals. "This repeal will hurt millions of consumers".
"If there's no forced arbitration clause in your contract, you have a choice". According to Mr. Francis, "c$3 young lady actions are uniquely suited to helping our military".