The Senate voted 51-50 on Tuesday, October 24 to repeal a rule put in place by the Consumer Financial Protection Bureau (CFPB) that banned mandatory arbitration clauses in certain financial contracts.
All 48 Democrats, along with Republicans Lindsey Graham and John Kennedy, voted against the resolution. Vice President Mike Pence cast the tie-breaking vote late Tuesday night, allowing big banks to enjoy absolute immunity from customer lawsuits of any kind. This is a huge win for Wall Street lobbyists. There is now no incentive to prevent abuses such as the Equifax data scandal or Wells Fargo's opening up millions of fraudulent accounts without customers' permission.
In order to overturn this rule released in July of this year, Senate Republicans used the Congressional Review Act, a seldom-used legislative process that allows lawmakers to overturn recently finalized rules with a simple majority vote, rather than the typical 60 votes.
"Tonight's vote is a giant setback for every consumer in this country," Richard Cordray, the head of the Consumer Financial Protection Bureau said in a statement. "Wall Street won and ordinary people lost. Companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers."
The House of Representatives already voted to overturn this rule back in July, so now it will make its way to the president’s desk for his signature.
"This bill is a giant wet kiss to Wall Street," said Senator Elizabeth Warren on the Senate floor Tuesday night as she defended maintaining the rule. "Bank lobbyists are crawling all over this place, begging Congress to vote and make it easier for them to cheat consumers."
Not only does this vote remove this consumer protection, it prevents the CFPB from introducing a “substantially similar” rule in the future without congressional action.
“If there's no forced arbitration clause in your contract, you have a choice. You can go to court or if your bank offers it you can pursue arbitration... Chances are pretty good that if the bank charged you an unauthorized $30 fee that there are other customers in the same boat and that means if you want you can join a class action lawsuit against the bank for free," said Warren. "A class action gives you a chance to get some money back."
Our securities fraud and class action attorneys at Meyer Wilson have dedicated their careers to protecting people targeted by fraudsters and taken advantage of by banks, financial advisers and brokerage firms. As bills that affect consumers are introduced and signed into law, we work hard to create new plans of action that will continue to help our clients secure the maximum recovery possible, and this new repeal won’t change our commitment to that. If you were the victim of a scam or fraudulent scheme by a broker for financial institution, call us at one of our office locations today or send us your information to request a free case evaluation.