Forget about our last set of comments on this issue of the recent anti-arbitration bill. The issue is far from solved and is considered a major win for the banks, big and small (i,e. the big banks, who had everything to gain from the measure, created a Potemkin’s village of small banks and lending institutions and let them lead the battle).
These are just the battles we cannot afford to lose if we are to regain some equality in this country. We must find a way to successfully resist the relentless drive of the money interests to marshal everything in their favor.
By ANDREW ACKERMAN and YUKA KAYASHI Oct. 272017 for The Wall Street Journal
WASHINGTON—The financial-services industry, relying on a group of small banks, successfully targeted a few Senate Republicans to ensure lawmakers scuttled a rule that would have made it easier for consumers to join in class-action lawsuits against banks.
The vote late Tuesday to kill the Consumer Financial Protection Bureau’s arbitration rule marks the most significant legislative victory for the financial-services industry in years. Industry lobbyists and congressional aides had always expected the difference in the vote count to be razor thin, so swaying just a couple of GOP senators could determine the fate of the independent agency’s rule.
Senators Lisa Murkowski and Susan Collins voted “yes” to kill the rule.
One of the main targets of the campaign, Sen. Lisa Murkowski of Alaska, privately told community bankers in her home state as early as August that she would likely support the resolution to block the rule, according to people familiar with her remarks. Yet she never publicly telegraphed her plans, leaving some lobbyists guessing on the vote’s outcome close to the last minute on Tuesday, when shortly after 10 p.m. she appeared on the Senate floor and voted “yes.”
Adding to the drama, Ms. Murkowski was the last Senate lawmaker to arrive, her vote leaving the chamber tied at 50-50, largely along party lines. Minutes later, Vice President Mike Pence put Republicans over the top with the deciding vote, as some lawmakers returning from a black-tie dinner looked on in tuxedos. Ms. Murkowski couldn’t be reached for comment Wednesday.
Vice-President Mike Pence delivered the coup-de-grâce that killed the rule.
The CFPB rule would have barred fine-print requirements in financial-services contracts that consumers use arbitration to resolve disputes, though consumers still would have had the option to use arbitration rather than the courts.
Under the Congressional Review Act of 1996, lawmakers can overturn a newly issued regulation on an expedited schedule with a simple majority vote in Congress. Had Congress not acted, the arbitration rule would have gone into effect next year.
Congressional action to roll back financial regulation has been rare. Though the Trump administration has pledged to “dismantle” much of the postcrisis financial rulebook, wholesale legislative efforts to kill the 2010 Dodd-Frank regulatory measures languish in the Senate. Meantime, the Trump administration has favored easing certain Dodd-Frank rules administratively.
Proponents of killing the CFPB rule also lobbied Susan Collins of Maine and John Kennedy of Louisiana, two Republicans who at least initially hesitated to take a position publicly. Ms. Collins voted against the rule, while Mr. Kennedy voted to keep it.
Ms. Collins said Wednesday that lobbying by small credit unions convinced her they would be “devastated” by the measure. She also said she conducted her own review of the CFPB’s economic studies and came to the conclusion that “consumers in most cases were far better served by arbitration than by class-action lawsuits.” Proponents say arbitrated cases are generally resolved more quickly and less expensively than court cases.
Senators John Kennedy and Linsey Graham voted to keep the rule.
Mr. Kennedy, who told reporters the morning of the vote that he was still studying the rule in question, was one of two GOP lawmakers to vote “no” to killing it, joining Lindsey Graham of South Carolina. Mr. Kennedy said he voted the way he did after hearing from veterans groups who support the CFPB rule, and after taking account of revelations that credit monitor Equifax Inc. initially sought to require victims of its massive hack to settle disputes through arbitration.
Mr. Graham, a former trial attorney, had long said he would vote in support of the CFPB’s rule. In an interview earlier this year, he said arbitration is “a windfall for the companies in terms of how you settle their cheating.”
Efforts to influence Sen. Murkowski intensified in recent months, with Alaska’s credit unions and community banks joining the fray. Helping lead the lobbying was Dan McCue, senior vice president of Alaska USA Federal Credit Union, by far the largest credit union in the state with $6.86 billion in assets.
Mr. McCue wrote an opinion piece on Oct. 13 for the Juneau Empire criticizing the CFPB regulation.
The rule “doesn’t make sense for any credit union member across this state,” Mr. McCue wrote. “Unfortunately, more Washington-based groups, many representing the interest of trial lawyers, are putting pressure on our senators to back the anti-arbitration rule, and we couldn’t disagree with them more.”
Mr. McCue declined to comment Wednesday, referring questions to the Credit Union National Association, a trade group that opposed the arbitration rule.
Beyond credit unions and community banks, overturning the rule was also a priority for regional, national and global financial companies that lobbied to have it overturned.