Vice President Mike Pence cast a tiebreaking vote in the Senate to all but kill the Consumer Financial Protection Bureau rule. The measure marks one of a few outright victories for banks in Congress since the 2008 financial crisis.
On Tuesday night, while many Americans were watching the first game of the World Series, Vice President Mike Pence trekked to Capitol Hill to hand banks one of their biggest legislative wins in years.
Pence cast the tiebreaking vote to all but kill a Consumer Financial Protection Bureau (CFPB) rule that would have made it much easier for people to sue lenders over financial disputes.
For weeks, Senate Republicans had been scrambling to secure enough votes to pass the measure. Meanwhile, Sen. Elizabeth Warren, Senate Minority Leader Chuck Schumer and other Democrats had repeatedly argued that repealing the regulation would allow high-profile scandals at Equifax and Wells Fargo to go unpunished.
With Pence’s vote, the Trump administration sent a clear signal: It isn’t worried about looking like it’s doing the industry’s bidding, even after campaigning last year on a populist, anti-Wall Street message. It may be a political risk worth taking, some analysts said. The issues involved aren’t necessarily well-understood by the public, and President Donald Trump has made clear that he wants to pare regulations that he blames for stifling economic growth.
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“Most voters don’t care, this is one night and nobody was watching,” said Charles Gabriel, an analyst at Capital Alpha Partners in Washington. “No one in Trump America can disagree with a vote against an agency the president and Treasury say is rogue and a rule that they say is for trial lawyers. This issue has been litigated enough so Republicans can uniformly feel comfortable taking that vote.”
The CFPB regulation, which had been set to take effect next year, would have restricted use of mandatory arbitration clauses that are buried in the fine print of contracts that consumers sign when they get credit cards or open checking accounts. The language bars customers from joining class-action lawsuits by requiring them to settle disputes through arbitration.
The measure’s approval marks one of a few outright victories for banks in Congress since the 2008 financial crisis. Whether it builds momentum toward additional wins, or emboldens Democrats to be even more aggressive in fighting efforts to roll back rules, isn’t clear. The big changes the Trump administration and Republican lawmakers would like to make to the Dodd-Frank Act could be in the balance, because they will likely require Democratic support.
Tuesday’s Senate vote took place shortly after 10 p.m. in Washington, D.C., and all but two Republicans voted to reverse the CFPB rule. Sens. Lindsay Graham of South Carolina and John Kennedy of Louisiana — both lawyers by profession — joined Democrats in opposing the change.
The House passed its version of the bill in July, shortly after the rule was released. The final step in the repeal effort is Trump’s signing the legislation.
A central argument made by GOP lawmakers is that the CFPB’s study was flawed and that there’s little evidence showing arbitration hurts consumers.
CFPB Director Richard Cordray and consumer advocates counter that the risk of paying out hundreds of millions of dollars in legal damages will incentivize banks to change their bad behavior.