People walk down Wall Street in New York City.
Photo by Spencer Platt/Getty

Republicans scramble to help banks, undercut rule for consumers

Updated

It’s easy to forget that there were voters last year who helped elect Donald Trump and a Republican Congress because they were concerned that Hillary Clinton might not be tough enough on Wall Street. As regular readers may recall, Trump swore up and down for months that it was Clinton who’d do Wall Street’s bidding, while Americans could expect his administration to stand up to the finance industry and its lobbyists.

Though millions of voters actually believed all of this, the claims appear quite ridiculous now.

The Republican-led Senate narrowly voted Tuesday to repeal a banking rule that would let consumers band together to sue their banks or credit card companies to resolve financial disputes. Vice President Mike Pence cast the final vote to break a 50-50 tie.

The banking industry lobbied hard to roll back the regulation, which the Consumer Financial Protection Bureau unveiled in July.

As we discussed yesterday, at issue is something known as arbitration clauses, which are pretty straightforward: in the finance industry, corporate powerhouses want to make it vastly more difficult for consumers to file class-action lawsuits against them. For example, if a large group of Americans felt ripped off by Wells Fargo after having opened an account, the financial giant would prefer to force those consumers into arbitration. The same is true of credit-card companies and credit-rating agencies such as Equifax.

With this mind, the Consumer Financial Protection Bureau (CFPB) created a rule to prohibit these companies from forcing customers into arbitration. The point, obviously, is to give consumers greater leverage against financial industry powerhouses.

At the behest of banking industry lobbyists, Republicans have been eager to take that leverage away.

To that end, House Republicans voted to block the CFPB’s rule, and last night, Senate Republicans followed suit. It’s a certainty that Donald Trump will sign the measure: not only did his vice president break the Senate tie, but yesterday, Trump’s Treasury Department announced its opposition to the consumer safeguard.

In other words, Republicans will succeed in killing the CFPB’s rule, though it was very close. Both of the Senate GOP’s ostensible moderates – Maine’s Susan Collins and Alaska’s Lisa Murkowski – voted with their party, siding with Wall Street. If either one of them had broken ranks, the measure would’ve failed.

All of this comes just a month after Equifax, one of the nation’s largest credit reporting agencies, was accused of exposing private information belonging to 143 million people, including Social Security numbers, credit card numbers, birth dates, home addresses, and in some instances, driver’s license numbers. Equifax was one of the companies pushing for Republicans to gut the CFPB’s consumer safeguard.

I naively thought Republicans would want to avoid being seen doing Equifax’s bidding so soon after last month’s controversy. Evidently, the party doesn’t care.

Update: The White House described the GOP bill as benefiting “everyday consumers,” which is pretty much the exact opposite of the truth.

Financial Industry

Republicans scramble to help banks, undercut rule for consumers

Updated