Senate Republicans on Tuesday voted to overturn a new regulation that would have allowed class-action lawsuits against big banks and credit card companies. The vote effectively handed Wall Street another win as the Trump administration seeks to dismantle former President Barack Obama’s legacy.
A 50-50 tie was broken by Vice President Mike Pence to overturn a measure crafted by the Consumer Financial Protection Bureau that limited forced arbitration clauses in the fine print of financial contracts. Such clauses prohibited people who signed up for a new account at a bank to launch a class-action lawsuit against that institution for unfair business practices, requiring them to enter into private arbitration in which banks are far more likely to get their way.
Sens. Jeff Flake (R-Ariz.), John McCain (R-Ariz.) and Bob Corker (R-Tenn.), who have amped up their criticism of the White House in recent months, including Flake’s announcement Tuesday that he would not run for re-election, all voted to overturn the measure.
Sens. Lindsey Graham (S.C.) and John Kennedy (La.) were the only two Republicans to vote for the measure. Every Democrat voted to protect the CFPB regulation. It now heads to the office of President Donald Trump, who is expected to quickly sign it.
The CFPB’s ban on such arbitration clauses, set to take effect in 2019, would have given power to individual consumers and likely would have forced big banks to change their business practices.
“Tonight’s vote is a giant setback for every consumer in this country,” Richard Cordray, director of the CFPB, said in a statement obtained by The New York Times. “As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.”
Democrats were vehemently against the repeal of the measure, which was written in July by the CFPB as part of its campaign to protect consumers following the 2008 financial crisis.
“Forced arbitration takes power away from ordinary people and gives it to big banks and Wall Street companies that already have an unfair advantage,” Sen. Sherrod Brown (D-Ohio) said in a statement. “By voting to take rights away from customers, the Senate voted tonight to side with Wells Fargo lobbyists over the people we serve.”
Senate Minority Leader Chuck Schumer (D-N.Y.) slammed the vote as an attack on the working class during his comments on the chamber floor late Tuesday.
“How horrible, how horrible that people might have the ability to come together and hire a lawyer,” Schumer said. “A yes vote is saying that you believe that Americans who get taken advantage of don’t have the right to seek recourse. A yes vote tells rapacious financial institutions that they can continue to hose consumers without any serious consequences or accountability because we all know average folks don’t have the ability to go to court on their own and sue.”