“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,” Amanda Werner, arbitration campaign manager with Americans for Financial Reform and Public Citizen, said in a statement. “This new rule will help prevent this kind of widespread fraud and ensure consumers can fight back.”
The political fissure between an Obama-appointed financial overseer and regulators hired by U.S. President Donald Trump is widening, with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray threatening to challenge in court any attempt to kill his agency’s new arbitration rule. To overturn a CFPB rule, two-thirds of the FSOC must agree that it puts the whole banking system at risk. “It’s an extraordinarily high standard,” said Brian Marshall, policy counsel for Americans for Financial Reform, a Washington-based advocacy group. “It’s ludicrous that the arbitration rule would meet that standard.”
Opponents of the Consumer Financial Protection Bureau’s arbitration rule are eyeing a trio of options for blocking the regulation before it takes effect, but all three are beset with their own challenges. The strategy with the most attention is for lawmakers on Capitol Hill to repeal the rule through the Congressional Review Act. But industry representatives are also considering the prospect of the Financial Stability Oversight Council overruling the regulation, or a group such as the Chamber of Commerce suing to throw the rule out. Yet all three appear to face an uphill climb. “Suggesting now that the rule would put the safety and soundness of the American banking system at risk is preposterous,” said Brian Marshall, policy counsel at Americans for Financial Reform. “Many banks do not use forced arbitration clauses at all, and the OCC has never suggested those institutions are not safe and sound as a result.”
“After years of review on the subject, the Consumer Financial Protection Bureau… declared a new rule Monday that bans banks, credit card companies, payday lenders and other financial firms from requiring consumers to settle group disputes through arbitration... ‘The biggest step has been taken. This is a huge victory for consumers,’ said Amanda Werner, campaign manager at Americans for Financial Reform and Public Citizen. ’We expect a lot of misconduct is going to be rooted out sooner.’”
“Consumers had good reason to celebrate Monday after the Consumer Financial Protection Bureau… issued a rule blocking credit card companies, banks and other financial firms from putting roadblocks in the way of customers joining class-action lawsuits. It’s a big deal… Said Lisa Donner, executive director of Americans for Financial Reform: ‘The consumer agency’s rule will stop Wall Street and predatory lenders from ripping people off with impunity, and make markets fairer and safer for ordinary Americans.’”
“‘“Quarles is an insider. He has been an insider for decades to both Wall Street and the inside-Washington sort of swamp ― the Wall Street-Washington nexus,’ said Marcus Stanley, policy director of Americans for Financial Reform.”
“‘Forced arbitration deprives victims of not only their day in court, but the right to band together with other targets of corporate lawbreaking. It’s a get-out-of-jail-free card for lawbreakers,’ said Lisa Donner, executive director of Americans for Financial Reform. ‘The consumer agency’s rule will stop Wall Street and predatory lenders from ripping people off with impunity, and make markets fairer and safer for ordinary Americans.’”
“The task force is co-chaired by Robert S. Eitel, a former attorney at for-profit college operator Bridgepoint Education, who is now senior counsel to DeVos… ‘At no point are they asking for the input of student loan borrowers or people enrolled in college,’ said Alexis Goldstein, senior policy analyst at the progressive Americans for Financial Reform. “The common theme here is enriching a certain number of private actors at the expense of protections for borrowers.”
“Dodd-Frank is not perfect. For one thing, it is overly complex. And there are worthy reform alternatives that have been put forward that rely less on specific regulations and more on increased capital requirements and structural changes to separate traditional banking from speculative investing… The Treasury report has none of those proposals’ analytical rigor. Rather, it is designed to please the banks. Americans for Financial Reform, a watchdog group, plans to release a paper showing that the Treasury review endorses almost two-thirds of specific deregulatory requests submitted to the Treasury in May by the Clearing House Association, a big bank lobby.”
“‘This legislation takes the worst ideas concocted by Wall Street and predatory lenders, and combines them into one toxic package,” [Lisa Donner, director of Americans for Financial Reform] said. ‘The bill is crammed with deregulatory gifts to the entire industry, including megabanks that want to return to the excessive borrowing and risky practices that led to the financial crisis.’”