Senate Kills Rule On Class Action Lawsuits Against Financial Firms

Vice President Pence cast the tie-breaking vote last night in the Senate to repeal a rule that made it easier for Americans to sue their banks and credit card companies for wrongdoing. Wiping out the rule affects tens of millions of Americans who will be sent to arbitration on disputes over a credit card, checking account or prepaid card. It also dismantles the work of the Consumer Financial Protection Bureau, which has been working on this for years.

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Senate Republicans have decided consumers should not have the right to file class-action lawsuits against banks even when they have a good case. The Senate voted last night to kill a rule that would have allowed for that. Critics say Republicans and the Trump administration are siding with Wall Street. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: Given a string of recent scandals with financial firms - Wells Fargo, the big Equifax hack - Democrats had argued, shouldn't Americans when they feel cheated or harmed have the right to sue these companies? Dennis Kelleher is the president of the consumer group Better Markets. He explains that at issue is what's buried in the fine print when you sign up for a credit card or just about any other product.

DENNIS KELLEHER: They're usually 10 to 50 pages long of teeny-weeny print. And in the middle of it, it says you're giving up your right to sue when the bank or the financial institution rips you off.

ARNOLD: The Consumer Financial Protection Bureau spent years studying this issue and concluded that's not fair. People deserve their day in court. And it crafted a rule saying that financial firms can't dodge class-action lawsuits this way. Republicans, though, quickly crafted a bill to kill the rule. Senator Elizabeth Warren spoke on the Senate floor last night.

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ELIZABETH WARREN: This bill is a giant wet kiss to Wall Street. Bank lobbyists are crawling all over this place, begging Congress to vote and make it easier for them to cheat their customers.

ARNOLD: Siding with Wall Street, though, Republicans argued that class-action lawsuits give a lot of money to trial lawyers and don't do that much to help consumers. Republican Senator John Cornyn said, all the expense of those lawsuits...

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JOHN CORNYN: You have to ask the question, whose benefit is that for? Is it really for the consumer, or is it for the lawyers? And I think the answer is pretty clear. It's not for the consumer.

ARNOLD: Actually, the CFPB report on this showed that class-actions paid out about 1,000 times more money to consumers overall than consumers got through arbitration. That's what companies steer people into with this fine print. In arbitration, it's the individual consumer going up against a giant institution. Late last night, the Senate was split on the issue 50 votes to 50 votes, which brought in Vice President Mike Pence.

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VICE PRESIDENT MIKE PENCE: The Senate being equally divided, the vice president votes in the affirmative, and the joint resolution is passed.

ARNOLD: Democratic Senator Sherrod Brown was not happy.

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SHERROD BROWN: The vice president only shows up in this body when the rich and the powerful need him. Well, it's pretty clear tonight that Wall Street needs him. This vote will make the rich richer. It will make the powerful more powerful.

ARNOLD: Lauren Saunders is associate director at the National Consumer Law Center. She couldn't agree more.

LAUREN SAUNDERS: It's really disappointing that, you know, 50 United States senators and the vice president of the United States have so much disregard for our system of justice.

ARNOLD: Basically, Saunders says, people who feel like they've been swindled or wronged deserve to get their day in court. They might not win. That's what the judges and the juries are all about. But now millions of Americans won't get their day in court, and Saunders says that's just not right. Chris Arnold, NPR News.

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