Late Tuesday evening, the Senate voted to nullify a consumer-oriented rule that would let millions of Americans band together to sue their banks or credit card companies.
Here’s a scandal: Senate Republicans just voted to let Wall St. banks shut down class action lawsuits by customers they screwed over.— Jon Favreau (@jonfavs) October 25, 2017
Vice President Mike Pence cast the tie-breaking vote to stop the rule from going into effect. The final count was 51-50.
Currently, consumers must go through an arbitrator to resolve financial disputes, but the Consumer Financial Protection Bureau (CFPB) finalized a rule that bans most types of mandatory arbitration clauses.
The rule would expose banks to large class-action lawsuits. Supporters say that possibility would help ensure banks, credit card companies and other lenders treat consumers appropriately.
The vote comes months after House action and reflects the effort of the Trump administration and congressional Republicans to undo regulations that the GOP argues harm the free market.
Under the Obama administration the Consumer Financial Protection Bureau's (CFPB) created the rule to restore the ability of consumers to join together and hold big banks like Wells Fargo accountable in court.
Prior to the rule being passed, Wall Street banks, payday lenders and other financial institutions could block consumers from enforcing their rights in court by writing “ripoff clauses” in the fine print of contracts.
Instead, they would force consumers to challenge them one-on-one in secret arbitration proceedings, where the average consumer ends up paying their bank $7,725.
Congress was able to repeal the Obama-era consumer protection law by using the Congressional Review Act, which requires just 51 votes to pass in the Senate.
The Associated Press contributed to this report.