[W]ASHINGTON — In a late-night vote Tuesday, the Senate passed legislation blocking a new rule that would have allowed customers to bring class-action lawsuits against financial institutions.
The measure, already approved by the House, passed the Senate 51-50, with the tiebreaking vote cast by Vice President Mike Pence.
Sen. Patrick Leahy, D-Vt., has been a vocal supporter of the rule, issued by the Consumer Financial Protection Bureau in July, which limited the use of the arbitration process by financial companies.
Leahy and others have argued that arbitration clauses in consumer agreements with companies force customers to bring grievances through a closed-door process that favors corporations, rather than in the court system.
After the vote, Leahy said in a statement that striking down the rule deals a blow to Americans’ access to the judiciary system.
“Access to our courts is under assault by companies that slip forced arbitration clauses into the fine print of agreements for basic services like checking accounts and credit cards,” Leahy said.
Sen. Bernie Sanders, I-Vt., also voted to keep the rule in place. In a post on Twitter, he called the bill “a massive gift to Wall Street.”
Senate Republicans just gave a massive gift to Wall Street at the expense of everyone else. https://t.co/9x6NHBpRun
— Bernie Sanders (@SenSanders) October 25, 2017
Earlier this year, Leahy and Sanders co-sponsored legislation that would invalidate most binding arbitration clauses.
Tuesday night’s vote deals a blow to the consumer bureau, an agency created under the Obama administration in the wake of the 2008 financial crisis. Many Republicans have sharply criticized it as lacking accountability.
All but two Senate Republicans voted to strike down the rule.
Senate Majority Leader Mitch McConnell, R-Ky., characterized the limitation on arbitration as a “misguided rule” that would not protect consumers but would excessively fund trial lawyers.
“The (consumer bureau), which claims to protect consumers, seems to have found a way to actually harm them more,” McConnell said. “By eliminating a key settlement tool, consumers who are found to have been harmed by bad actors would receive less compensation under the (bureau’s) regulation.”
