AFR Statement: Bipartisan Senate Bill Rewards Banks While Leaving out Consumers

Dec. 13, 2017

From: Americans for Financial Reform

To: Interested Parties

Re: S. 2155 committee passage


Bipartisan set of Senators advances deregulation for bankers, refuses to support consumer protections or Wall Street accountability.

A bipartisan majority of lawmakers on the Senate Banking Committee last week rejected a series of public interest amendments in order to advance a bill full of gifts to banks.

“A majority of members of the Senate Banking Committee chose deregulation that would leave individual, families, communities and our economy more vulnerable,” said Lisa Donner, executive director of Americans for Financial Reform. “Lawmakers should be focused on making banking and lending fairer and more accountable. But this group rejected amendment after amendment that would have strengthened protections for the public, including servicemembers and veterans, in order to advance a set of unnecessary and harmful gifts to the financial services industry.”

The committee advanced a bipartisan bill that would weaken or eliminate important regulatory protections in areas ranging from mortgage lending to the oversight of large banks and other financial institutions. The small number of consumer measures included in one section of the bill are entirely inadequate to counterbalance the impacts of this deregulatory agenda.

AFR detailed its objections to the bill in a separate letter.

Lawmakers supporting the bill rejected a set of amendments that would have restored or protected consumer rights, including those of service members in particular, and increased the extent to which big banks are held accountable if they break the law. These included:

  • An amendment offered by Sen. Catherine Cortez-Masto that would have restored consumers’ rights to sue big banks when they break the law. The amendment would have restored a regulation written by the Consumer Financial Protection Bureau that curbs the practice of forced arbitration, but exempted financial institutions with less than $10 billion in assets. Forced arbitration strips consumers of their right to a day in court, forcing them into a secretive process where the bank chooses the judge.
  • An amendment offered by Sen. Sherrod Brown that would have limited garnishments and offsets of income for debts relating to education loans. At a time when student debt has reached $1.4 trillion, and the Consumer Financial Protection Bureau has found that there are over 8 million borrowers in default on their student loans, the government should be looking for ways to alleviate this burden. Instead, far too often, it spends resources to garnish the wages of low-income Americans already struggling to get by. This amendment would also have protected Social Security recipients from having benefits cut to repay ancient student loans, including ones owed to for-profit schools.
  • An amendment offered by Sen. Jack Reed that would have allowed the Consumer Bureau to enforce the Servicemembers Civil Relief Act. This law protects members of the military from home foreclosures and other predatory financial practices while on active duty. In recent years, it’s been repeatedly violated by large banks, demonstrating the need for tougher enforcement.
  • Several amendments offered by Sen. Warren that would deny regulatory benefits from the bill to banks that were bad actors or had received government assistance. These amendments denied regulatory benefits to any bank that had recently paid over $10 million in regulatory fines, to banks that had received significant government bailout funds from the TARP program, and also required top officials of banks receiving regulatory benefits from the bill to attest that there is no criminal conduct or civil fraud in their institution.