Vice President Mike Pence on Tuesday cast the tie-breaking vote to repeal a rule allowing consumers to file class-action lawsuits against financial institutions.
Mike Crapo, Idaho’s GOP senior senator and chairman of the Senate Banking, Housing and Urban Affairs Committee, introduced the joint resolution in the Senate in July, saying an arbitration system is a better way to solve financial disputes.
“The effort to try to characterize this as some devious system that has been created to try to stop consumers from having access to fairness is simply false,” Crapo told the Associated Press. “We have a very fair system that has been working for over 100 years in this country.”
Crapo said the average pay-out for consumers in class-action lawsuits against financial companies was just $32, but lawyers stood to make millions.
The White House welcomed the repeal in a statement that highlighted its own Treasury Department report criticizing the rule. “Under the rule, consumers would have fewer options for quickly and efficiently resolving financial disputes,” the statement said. “Further, the rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers.”
The director of the Consumer Financial Protection Bureau, which developed the rule, and congressional Democrats claim arbitration has allowed problems like deceptive sales practices at Wells Fargo to continue, according to the AP. They decried the vote.
“This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company,” said CFPB Director Richard Cordray.