- The Washington Times - Tuesday, October 24, 2017

With Vice President Mike Pence casting the tie-breaking vote, the Senate late Tuesday approved a rollback of the Consumer Financial Protection Bureau’s rule that would have prohibited companies from forcing customers into arbitration, rather than class-action lawsuits.

The vote also sent a shot to the CFPB itself, warning the agency and its Obama holdover director that the GOP Congress will act as policeman should the bureau stray too far from the Trump agenda.

“The CFPB continues to be one of the most unaccountable bureaucracies in Washington and this Congress will continue to stand up for consumers even when the CFPB will not,” Senate Majority Leader Mitch McConnell said.

Democrats vehemently objected to the vote, saying it was the latest move by Republicans to reward wealthy corporate donors.

Republicans, though, said companies should be allowed to forge contracts with customers outside of the nosy interference of the government and said promoting class action lawsuits over arbitration is a way of enriching lawyers rather than protecting consumers.

The bill cleared the House earlier this year on a near-party-line vote. The Senate split 50-50, leaving Mr. Pence to break the tie.

Mr. Trump is expected to sign the measure, completing the repeal of the rule.

In a statement Tuesday night, the White House said a Treasury Department study found forced arbitration would actually leave consumers worse off, with fewer choices and more risk to community banks.

“By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB’s uninformed and ineffective policy,” the White House said.

The rule was issued by the CFPB, one of the key parts of the Dodd-Frank legislation that imposed new regulations after the Wall Street collapse last decade. The CFPB is an independent agency charged with being the consumers’ watchdog, outside the usual political process.

Republicans say under the leadership of an Obama holdover, Richard Cordray, the bureau has become an anti-business bastion, and they said the arbitration rule is an example of that.

Under the rule, companies such as banks and credit card issuers could no longer insist that disputes be settled by binding arbitration. The alternative to arbitration is usually class action lawsuits.

Some consumer groups said the threat — or actual filing — of class action suits is the best way to keep companies honest with their customers, while arbitration tilts things too much in corporations’ favor.

“We saw with Equifax, the idea that they didn’t have to protect people’s information and were almost nonchalant about it,” said Senate Minority Leader Charles E. Schumer. “we see it all the time and the average consumer doesn’t have the lawyers and the time and the ability to study what’s happening.”

Mr. Schumer said the bill amounted to a betrayal of Mr. Trump’s promise to look out for the average American.

The GOP used the Congressional Review Act to overturn the rule. No filibuster is possible in the Senate under the CRA, which gives Capitol Hill a chance to scrutinize new agency rules before they take effect.

The CRA was rarely used until this year, when with control of Congress and the White House Republicans have used it to scratch a number of Obama-era regulations.


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