U.S. House votes to kill consumer lawsuit rule

Reuters




By Lisa LambertWASHINGTON, July 25 (Reuters) - The U.S. House of
Representatives on Tuesday voted overwhelmingly to erase a new
rule that lets bank and credit-card customers band together in
lawsuits, as the agency that drafted the measure, the Consumer
Financial Protection Bureau, moves closer to the center stage of
congressional politics.
    The Republican-led House voted 231 to 190 along strict party
lines to kill the rule barring financial institutions from
forcing customers to agree to take future disputes to
arbitration, instead of the courts, as a condition of opening
accounts. It now goes to the Senate.
    Under the Congressional Review Act, both chambers can vote
to repeal a new rule with simple majorities.
    The Republican majority in the Senate is slimmer. If the
party loses just three lawmakers the CFPB rule, finalized 15
days ago, will survive. Also, the Senate calendar is currently
full with healthcare and tax reform, and lawmakers may not get
around to voting on the rule. [nL1N1K117Z]
    Republicans say "mandatory arbitration" works quickly to
garner individuals substantial awards, while group lawsuits
benefit only the attorneys who file them. [nL1N1K2182]
    Democrats contend the contract clauses rob customers of
constitutional rights. Because companies hire the arbitrators
and proceedings are secret, they also say the process is rigged
against consumers.
    The Senate is being pressured on both sides by major
interest groups, including the pro-business Chamber of Commerce
and the workers' rights group the American Federation of Labor
and Congress of Industrial Organizations. Much of the fight,
though, is about the CFPB itself, which is appealing a legal
decision that its structure is unconstitutional. [nL1N1K92AY]
    Now that Republicans control Congress and the White House
the six-year-old agency's future is in doubt. President Donald
Trump's administration has argued against the CFPB in court, the
House has approved legislation radically overhauling it, and the
acting comptroller of the currency has attacked the arbitration
rule.
    Senate Banking Committee Chairman Mike Crapo helped author
the resolution to kill the new rule. Meanwhile, Senator
Elizabeth Warren, a Massachusetts Democrat, held a news
conference on Tuesday rallying supporters to protect it.
    Warren originally came up with the idea of an agency to
shield individuals from predatory lending and help prevent the
type of devastation average people experienced during the
2007-09 financial crisis.
    During Tuesday's fiery floor debate, Republicans lambasted
the CFPB for having a single director who both writes and
enforces rules and for dictating how businesses and customers
interact. Democrats cited how the agency has returned billions
of dollars to wronged consumers.

 (Editing by Matthew Lewis)
 ((lisa.lambert@thomsonreuters.com)(+1 202 898 8328)(Reuters
Messaging:  lisa.lambert.thomsonreuters.com@reuters.net))

Keywords: USA CONGRESS/ARBITRATION






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