alexfisher50
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| Trump Kills Obama's Rule Allowing Consumers to Sue Banks |
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Seems the war between US President Donald Trump against anything enacted by the Obama administration is still in full effect. The biggest issue to date, attempts to repeal Obamacare, have failed thus far, but this latest move appears to be a victory for the Trump camp. Big banks now have protection from the everyday consumer in that consumers can no longer join with each other to file class action lawsuits against their financial institutions.
Seems the war between US President Donald Trump against anything enacted by the Obama administration is still in full effect. The biggest issue to date, attempts to repeal Obamacare, have failed thus far, but this latest move appears to be a victory for the Trump camp. Big banks now have protection from the everyday consumer in that consumers can no longer join with each other to file class action lawsuits against their financial institutions.
STARTING AT THE BEGINNING: WHAT IS THIS RULE?
Essentially the rule in question was established in July by the Consumer Financial Protection Bureau (CFPB). The CFPB sounds exactly like what it’s purpose is, to protect consumers and their financial rights and information.
The rule, which was supposed to go into effect in the Spring of 2018, would allow consumers to band together to file class-action lawsuits against their financial institutions, including banks, credit unions, and credit card companies. It also barred these types of financial institutions from including wording in their contracts that would force consumers into arbitration rather than lawsuits should there be a grievance.
WHAT IS THE ISSUE?
Reading that rule, it seems fair. Why shouldn’t consumers have the right to file group lawsuits against their financial institutions if the institutions are participating in unfair business practices?
Democrats say, exactly. The rule protects consumers and gives them power where otherwise they may not have any. Average Americans don’t have the financial means to take on costly lawsuits against big banks and credit card companies. By banding together with other consumers who were also wronged, individual financial burdens are lessened.
Republican say, not so fast. Most of the time, consumers in class action lawsuits get very little compensation, and it’s the lawyers who make the most profit. At the same time, small independent banks and credit unions are harmed by having to defend themselves in these costly legal battles.
WHAT’S THE PROCESS FOR REJECTING THIS RULE?
Congress first had to look at this rule and decide that they felt it did not stand up for small banks, credit unions and the everyday consumer and instead favored lawyers. So, in October the Senate took the measure up for a vote. The results were that the vote was split 50-50, with all but two republicans supporting the repeal of the rule. No democrats nor any independents voted in favor of repealing the rule. As it was a tie, the deciding vote is then turned over to Vice President Mike Pence – his vote was in favor of repealing the rule. As such, the repeal of the rule passed the Senate and was then turned over to President Trump to be signed.
In early November, the White House confirmed that President Trump signed the bill into law that lets banks block consumers from filing class action lawsuits against them. The resolution signed by Trump under the Congressional Review Act also stops regulators like the CFPB from creating similar rules to protect consumers in the future.
THE RESULT
How you look at the result probably depends on where you stand on most issues, with the Republican side or the Democratic side. There are good arguments on both sides.
From the Republican side, any American who’s gotten a $2 check from some class action lawsuit against a product manufacturer or other entity probably agrees that class action lawsuits are rarely monetary windfalls and it’s likely that the lawyers did make the most money.
However, from the Democratic perspective usually monetary gain is not the motivation for a class action lawsuit. Usually, a class action lawsuit is to stop companies from unfair business practices that take advantage of consumers. It gives the consumer a voice, some power.
It’s no surprise that President Trump signed this resolution as it falls in line with campaign promises to take some of the regulations off banks and off the financial industry. Whether or not taking away consumers right to file a class action lawsuit protects banks or hurts consumers is yet to be seen.
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