CFPB Chief: Senate Vote a 'Giant Setback for Every Consumer'
GOP senators (and VP Mike Pence) just made it harder for consumers to sue financial institutions
By Jenn Gidman,  Newser Staff
Posted Oct 25, 2017 4:34 AM CDT
In this Oct. 7, 2015, file photo, Consumer Financial Protection Bureau Director Richard Cordray listens to a speaker during a a hearing in Denver.   (AP Photo/Brennan Linsley, File)

(Newser) – A rule that would have offered consumers a powerful tool against financial institutions by allowing them to join together to sue saw its demise Tuesday night at the hands of Senate Republicans. The New York Times and Wall Street Journal report that, by a vote of 51 to 50 (with Vice President Pence as the tiebreaker), overturned a Consumer Financial Protection Bureau initiative started under former President Obama that would allow consumers to launch class-action lawsuits against banks and credit card companies instead of being pushed into private arbitration. "Tonight's vote is a giant setback for every consumer in this country," CFPB Director Richard Cordray said in a statement, noting that big players like Wells Fargo and Equifax can now basically do as they please without fear of major customer pushback. Cordray added: "Wall Street won and ordinary people lost."

The CFPB, which emerged after the housing crash, says the rule that was set to take effect in 2019 would have offered consumers recourse against predatory practices. The Trump administration, however, has called the bureau "an agency gone rogue" and accused it of overregulation that hurts businesses and the economy. Critics of the CFPB rule, which would have barred financial institutions from being able to slip arbitration clauses into contracts with consumers that prohibit class-action suits, say arbitration is more efficient than duking issues out in court. The Times notes this vote can be filed under "win" for Republicans—a column that's been mostly empty in terms of major GOP legislative initiatives passed under Trump. Two Republicans sided with Dems in the vote: Lindsey Graham and John Kennedy. The measure now heads to Trump's desk; he's expected to give it the green light.

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