The regulation to prohibit forced arbitration in consumer agreements was proposed by the Consumer Financial Protection Bureau, and specifically designed to help consumers deal with small losses spread over large numbers of people (think Wells Fargo) by eliminating the forced arbitration clause in the fine print of your deposit agreement, allowing you to bring civil suits for damages. Of course, no ordinary person can afford to sue over an illegal action that harms them $50. But through class actions, big players can be brought to court and made to account for misdeeds. This is the very situation class actions are made for. Research on arbitration is clear that arbitration does not work for consumers who are harmed but works very well for the financial industry.
This vote was payoff to the financial industry who are the top contributors to reelection campaigns and parties. If you think that the financial sector shouldn’t be subject to class action suits, consider this. The financial industry itself uses class actions suits. But they don’t want their customers to use them. For more info, see New York Times and NPR coverage on the topic, and Open Secrets information on financial sector spending on elections. You may wind up asking yourself why some in Congress are so intent on dismantling or neutralizing the CFPB. By design, Congress is not able to control the actions of the agency through funding and does not have oversight authority. You can’t have the foxes guarding the henhouse. If CFPB does its job to protect average Americans, it will be targeted by those who are heavily indebted to financial industry interests. And there are 51 of them that we know of.
Analysis of Financial Sector Spending