July 20, 2017
Arbitration Rule Repeal Is Payback to Big Banks
Public Citizen Analysis Shows Republicans Backing Repeal of the CFPB’s Arbitration Rule Received More Than $100 Million in Lifetime Campaign Contributions From the Financial Sector
WASHINGTON, D.C. – The financial industry has given more than $100 million in campaign contributions to Republicans in the U.S. Senate who are attempting to overturn a rule to protect consumers from financial rip-offs, according to analysis (PDF) Public Citizen released today. These contributions help explain why Republicans in Congress are willing to aid and abet bank rip-offs of their own constituents, Public Citizen maintains.
The arbitration rule, finalized on July 10 by the U.S. Consumer Financial Protection Bureau (CFPB), prohibits rip-off clauses in consumer financial contracts. These clauses may be the single most important tool that predatory banks, payday lenders, credit card companies and other financial institutions have used to escape accountability for cheating, conning, fleecing, defrauding and plundering consumers. Republicans in both chambers of Congress have introduced Congressional Review Act (CRA) resolutions to strike down the CFPB’s rule and are expected to hold a vote in the U.S. House of Representatives as early as Tuesday.
“Repealing the CFPB’s arbitration rule is payback for the more than $100 million in campaign contributions Republicans have taken from the financial industry,” said Robert Weissman, president of Public Citizen. “This CRA vote on this rule is a litmus test of whose side you’re on: Main Street American consumers or big banks. Big banks, the financial industry and their allies in Congress are trying to overturn the CFPB’s rule because it will deprive them of a means to rip off consumers with impunity. There is absolutely no consumer benefit in being forced into arbitration and losing the right to file a class-action lawsuit, and there are substantial costs totaling hundreds of millions every year.”
“Since most consumers cannot afford to take on a big corporation on their own, banks like Wells Fargo get away with ripping off large numbers of customers,” said Lisa Gilbert, vice president of legislative affairs for Public Citizen. “Yet even after elected officials from both major parties condemned Wells Fargo for its widespread fraud and financial abuses, these same politicians are about to cast a vote that would help financial fraudsters like Wells Fargo get away scot-free. This unpopular and savage attack on American consumers must be defeated.”
The CRA allows Congress – by majority vote in both chambers, with limited debate, no possibility of a filibuster and the president’s signature – to overturn recently issued public protections. Making matters worse, the CRA blocks agencies from issuing rules that are “substantially the same” without express authorization from Congress. To date, Republicans in Congress and President Donald Trump have used the CRA to strike down 14 regulatory protections as payback to their corporate donors, who spent more than $1 billion to get their way. Six months into the Trump administration, these 14 resolutions remain the only legislation of consequence the president has signed.