Senate GOP moves to prevent consumers from suing banks

WASHINGTON — The Republican-led Senate narrowly voted Tuesday to repeal a banking rule that would let consumers band together to sue their bank or credit card company to resolve financial disputes.

Vice President Mike Pence cast the final vote to break a 50-50 tie. The banking industry had been lobbying hard to roll back the regulation from the Consumer Financial Protection Bureau. The bureau had moved to ban most types of mandatory arbitration clauses found in the fine print of agreements consumers often enter into when opening a checking account or getting a credit card.

The vote reflects the effort of the Trump administration and congressional Republicans to undo regulations that the GOP argues harms the free market. The measure now moves to President Donald Trump’s desk for his signature. White House press secretary Sarah Huckabee Sanders said the president applauded the vote.

“The rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers,” Sanders said.

Democratic lawmakers said the CFPB’s rule would have given consumers more leverage to stop companies from financial wrongdoing. They cited the sales practices at Wells Fargo and the security breach at credit company Equifax as examples of misdeeds protected through forced arbitration.

“So who does forced arbitration help? Wall Street banks and other huge corporations that never pay the price for cheating working people,” said Sen. Sherrod Brown, D-Ohio.

Republicans said the arbitration system has worked “wonderfully” for consumers. They said the payouts for the average consumer in arbitration cases are generally much larger and come more quickly than the relief gained through class-action lawsuits.

Sen. Mike Crapo, the Republican chairman of the Senate Banking, Housing and Urban Affairs Committee, said the average pay-out for consumers in class-action lawsuits against financial companies was just $32, but lawyers stood to make millions.