Congress should preserve CFPB’s rule curbing forced arbitration and abandon attempts to lighten regulation of credit bureaus in the wake of massive data breach at Equifax.
“‘Wells Fargo used forced arbitration clauses and class-action bans to hide abuses and prevent its customers from securing justice or even realizing that problems the bank causes them are widespread,’ said Lisa Donner, executive director of Americans for Financial Reform. ‘It now appears that they have also tried to hide the breadth of problems inside the bank, even in the face of direct questions from members of Congress. Leaders of the relevant committees should be demanding answers and further hearings to get them.’”
“This Wells Fargo case is yet another demonstration of the harm consumers will suffer if Congress chooses to repeal the CFPB arbitration rule and restore banks’ ‘Get out of Jail Free card.,” said Lisa Donner, Executive Director for Americans for Financial Reform. “It is also yet another reminder why lawbreaking banks are pushing for the rule to be overturned: blocking consumers right to go to court makes it easier for them to rip people off.”
“Consumer groups are invoking Wells Fargo as they seek to persuade a handful of Republican senators to help defeat a potential September vote on a resolution blocking the arbitration rule. ‘We’ve definitely pointed to Wells Fargo as pretty much the poster child for why we need this rule,’ Amanda Werner, campaign manager at consumer groups Americans for Financial Reform and Public Citizen, told Bloomberg BNA.”
“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.”
“Sometime in the next few weeks, the Consumer Financial Protection Bureau is expected to impose stringent limits on the ability of banks and credit card companies to avoid consumer lawsuits. The financial services industry has been screaming bloody murder
‘We’re all preparing for a big fight,’ says Amanda Werner, who has been keeping an eye on the CFPB rule making for the consumer groups Public Citizen and Americans for Financial Reform.”
“The House passed legislation to effectively kill class action lawsuits, which are often consumers’ only chance to fight back against repeated corporate fraud and scams… ‘If this bill becomes law, those ill-gotten gains will instead be used to pad Wall Street’s bottom line,’ said Lisa Donner, Executive Director of Americans for Financial Reform… ‘H.R. 985 gives banks and lenders a license to steal and encourages more scandals like Wells Fargo’s fake account opening.'”
Over 18,000 members of Americans for Financial Reform signed a petition calling on the Consumer Financial Protection Bureau to ensure that consumers aren’t deprived of their day in court.