In an official statement issued Wednesday evening, the White House praised Senate Republicans for voting to kill Obama-era consumer protections.
The Consumer Financial Protection Bureau (CFPB) was created following the passage of the Dodd-Frank financial reform package in 2010. One of the bureau’s powers was to assist Americans in the filing of class-action lawsuits against Wall Street banks, should any bank or credit card company take action that harms millions of consumers.
On Tuesday, Vice President Mike Pence cast a crucial tiebreaker vote to kill the class-action rule after several Republicans sided with Democrats who argued eliminating the rule would prevent Americans from holding banks accountable. In a prepared statement, President Trump announced his intention to sign the measure into law.
“President Donald J. Trump applauds the Congress for passing [the resolution],” the statement read. “The rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers.”
However, CFPB Director Richard Cordray condemned the vote as “a giant setback for every consumer in this country.”
“Wall Street won and ordinary people lost,” Cordray said. “This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company.”
Republicans’ decision to kill the rule comes not long after credit bureau Equifax had its security systems compromised, opening up millions of Americans’ sensitive personal information, like Social Security numbers and dates of birth, to be obtained by hackers. In addition to not being able to sue Equifax, Americans will also now be unable to seek relief from Wells Fargo, after it was discovered its scam of opening up millions of accounts without customers’ consent and charging them usurious fees was even worse than initially reported.
The CFPB is in the process of taking student loan servicer Navient to trial for intentionally misleading student borrowers about repayment plans and misallocating payments. It is not yet known whether or not student borrowers affected by Navient’s practices will be able to take the company to court following the elimination of the class-action rule.
Matthew P. Robbins is a freelance economics contributor covering wages, budgets, and taxes. He lives in Chicago, Illinois with his husband and two cats.