Hours before the House Financial Services committee was scheduled to hold a hearing on the Equifax data breach, the Senate voted Tuesday night to repeal a federal rule that would have made it easier for consumers to seek redress through class action suits.
Under the rule, from the Consumer Financial Protection Bureau, consumers would not have to submit to mandatory arbitration in disputes with financial companies subject to CFPB oversight rules such as credit card companies; they would have the option of joining with other consumers in a class action suit. Now banks will maintain their right to require customers to sign away their right to sue, assuming President Donald Trump signs the joint resolution. (The House had passed the bill in July.)
The Senate vote “robs consumers of their most effective legal tool against corporate wrongdoing,” said CFPB Director Richard Cordray in a statement. “As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers. I urge President Trump to stand with consumers and veto this resolution.”
So do other consumer groups, such as the Consumer Federation of America and U.S. PIRG, and Democratic legislators like Sen. Elizabeth Warren, D-Mass., and Rep. Maxine Waters, D-Calif., the ranking member of the House Financial Services Committee who said in a statement that the Senate vote Tuesday night was another act by Republicans to “weaken and ultimately destroy” the CFPB.
There’s little chance that Trump won’t sign the bill, especially since Vice President Mike Pence cast the deciding vote to void the rule.
The White House released a statement Wednesday morning applauding the Senate vote. Referring to a recent report by the Treasury Department, Trump said “the CFPB’s rule would neither protect consumers nor serve the public interest…. Consumers would have fewer options for quickly and efficiently resolving disputes.”
Trump, Senate Banking Committee Chairman Mike Crapo, R-Idaho, and others opposing the rule said its primary beneficiaries would be plaintiffs’ attorneys who bring class action suits, a sentiment echoed by Richard Hunt, president and chief executive of the Consumer Bankers Association trade group.