Let the predatory financial practices flourish and thrive

That vote against a new consumer protection:

Senate Republicans voted on Tuesday to strike down a sweeping new rule that would have allowed millions of Americans to band together in class-action lawsuits against financial institutions.

The overturning of the rule, with Vice President Mike Pence breaking a 50-to-50 tie, will further loosen regulation of Wall Street as the Trump administration and Republicans move to roll back Obama-era policies enacted in the wake of the 2008 economic crisis. By defeating the rule, Republicans are dismantling a major effort of the Consumer Financial Protection Bureau, the watchdog created by Congress in the aftermath of the mortgage mess.

The rule, five years in the making, would have dealt a serious blow to financial firms, potentially exposing them to a flood of costly lawsuits over questionable business practices.

And we can’t have that, so the banker class moves to protect the banker class.

For decades, credit card companies and banks have inserted arbitration clauses into the fine print of financial contracts to circumvent the courts and bar people from pooling their resources in class-action lawsuits. By forcing people into private arbitration, the clauses effectively take away one of the few tools that individuals have to fight predatory and deceptive business practices. Arbitration clauses have derailed claims of financial gouging, discrimination in car sales and unfair fees.

The new rule written by the consumer bureau, which was set to take effect in 2019, would have restored the right of individuals to sue in court. It was part of a spate of actions by the bureau, which has cracked down on debt collectors, the student loan industry and payday lenders.

But now the Republicans have put a stop to it, so debt collectors, the student loan industry and payday lenders can go right on ripping people off! Is this a great country or what.

Looking to head off a repeal, Democrats and consumer advocates branded the effort as a gift to financial institutions like Wells Fargo and Equifax. Both companies, in the face of corporate scandals, used arbitration clauses to try to quash legal challenges from customers.

The rule, Democrats argued, was precisely what was needed to protect the rights of vulnerable borrowers. Regulators and judges, including some appointed by Republican presidents, have also backed the position.

Class actions, they argue, are not just about the size of the payouts, which are typically spread out among a large group of people. They are also about pushing companies to change their practices. Large banks, for example, had to pay more than $1 billion to settle class actions beginning in 2009 that accused them of tweaking checking account policies to increase the amount of overdraft fees that they could charge customers.

“Tonight’s vote is a giant setback for every consumer in this country,” Richard Cordray, the director of the consumer bureau, said 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.”

Nice work, Bob Corker and all the rest of the Republicans.

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