The Treasury Department just came out with a report arguing that banks should be allowed to force their customers to give up their day in court — to band together when they are wronged and instead must take any disputes alone, one-by-one, before private arbitrators. Let’s take a look at the basis for Treasury’s arguments.

The Treasury’s report, which criticizes the Consumer Financial Protection Bureau’s (CFPB) rule limiting forced arbitration, suffers from a number of weaknesses and does little to recognize the societal costs that are imposed when banks act badly.

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The thrust of the Treasury’s argument is that without forced arbitration, clauses and class-action waivers, financial companies like Wells Fargo or payday lenders will face $500 million in litigation and compliance costs over a five-year period, all the while producing little to no benefit to consumers.

The Treasury is wrong on both counts and here’s why.

Just for the sake of keeping things in perspective regarding the supposed $500-million loss, let’s remember that banks alone, which are only a subset of the financial services companies to which the rule would apply, made $48.3 billion in profit — in the second quarter of this year alone, according to the Federal Deposit Insurance Corporation.

So, even if it’s true, we’re talking about a tiny fraction of bank profits, weighed against the rights of aggrieved Americans.

But even if the big banks that use forced arbitration (which, for the record, is a minority of banks and credit unions in the U.S.) suffer increased costs, that only levels the playing field for the vast majority of credit unions and community banks (the bedrocks of community finance) that already don’t use forced arbitration.

Forced arbitration deprives Americans of the ability to take a wrongdoer to court, a basic right enshrined in the Seventh Amendment. It’s no wonder that veterans and service-member groups have endorsed the CFPB rule.

Indeed, federal law already strives to protect service members by prohibiting forced arbitration clauses in certain lending contracts, though not all areas are covered by the CFPB rule.

In its report, the Treasury also tried to wrap itself in the mantle of being the consumer advocate with arguments about increases in the cost of credit that would result from the enactment of this rule — a warning that is frequently given by Comptroller of the Currency Keith Noreika. But in truth, this is nothing more than a scare tactic.

Cordray responds to Treasury's report attacking CFPB arbitration rule. In short: where you been, bro? pic.twitter.com/85u1THwNEE — Pete Schroeder (@peteschroeder) October 24, 2017

Banks, including Bank of America and Capital One, don’t even use forced arbitration, and Congress banned arbitration for mortgages back in 2010. Moreover, Fannie Mae and Freddie Mac, the mortgage giants, chased forced arbitration clauses out of mortgages they purchased starting in 2004.

In fact, many banks gave up forced arbitration in credit card contracts years ago and have not rushed to put them back. And despite all of these moves away from forced arbitration clauses, there has been nothing to indicate that this has caused the cost of credit offered to consumers by these banks to suddenly jump.

So what are the real consequences of banning forced arbitration and class action clauses? After deducting attorneys’ fees and court costs, class-action lawsuits returned $2.2 billion to consumers between 2008-2012.

What’s more, the Economic Policy Institute found that the average consumer who goes to arbitration ends up actually having to pay their bank or lender $7,725 on average in fees. In terms of recovery, the numbers do not favor the consumer in arbitration.

What’s more, the Treasury willfully ignores the main effect of many class-action lawsuits: to force changes to practices that harm consumers.

Even when consumers get back only small amounts of money in class actions — like the fraudulent fees or charges that Wells Fargo has imposed on customers — the mixture of information that comes out and the publicity associated with a day in court can help ensure that customers aren’t ripped off again in the future.

The possibility of class actions also pushes banks to invest in systems to ensure compliance with the law, which is where we want them spending money.

Forced arbitration denies Americans the basic right that CFPB rule restores: a hearing, a chance to make their case that they were defrauded and the opportunity to ensure that other consumers don’t get the same treatment.

The Senate leadership should end its attempts to roll back the rule and let American consumers stand up for themselves. Main Street banks treat their customers right. Wall Street banks need to do the same and to face the music when they don’t.

Chris Odinet is a visiting professor at the University of Iowa College of Law and is the Horatio C. Thompson endowed assistant professor of law at the Southern University Law Center. Email: codinet@sulc.edu; Twitter: @ChrisOdinet