- Thomson Reuters
- Financial firms like Equifax would love to take away the consumer’s right to sue them. Obama-era rules made that impossible. Now the GOP has reversed that, even as the country remains furious over Equifax’s behavior.
Sometimes it’s unclear whether policymakers are living in the same world as their constituents. This is one of those times.
On Tuesday, the GOP rolled back an Obama-era rule that would have kept big financial firms from making consumers sign agreements that take away their right to sue the firms. With help from Vice President Mike Pence’s tiebreaking Senate vote, the move is being considered a legislative victory for the party.
It’s unclear why, however, because it’s hard to see how voters will cheer legislation that is essentially a gift to Wall Street. The rule in question, set to take effect in 2019, was made by the Consumer Financial Protection Bureau, a government agency set up after the financial crisis to ensure that products like credit cards and mortgages aren’t scamming people.
The argument for why the GOP wants to make it harder for people to sue financial firms pretty much all comes down to two ideas: The rule would be hard on financial firms, and the CFPB never actually proved that it would work. The two points are made, remade, and rephrased ad nauseam in an 18-page report posted on the Treasury Department’s website.
The whole thing is nonsense. Even worse, it’s unnecessary. We – consumers and voters – know the only thing we need to know to understand why this rule should take effect.
I’ll give it to you in three words: Equifax tried it.
Equifax tried it
You’ll recall that last month, after the biggest consumer-data breach in American history, the credit-rating agency Equifax tried to briefly fool customers into giving up their right to sue the company. The company designed it so that people who tried to gain access to Equifax’s site to check whether their information was stolen would agree – knowingly or, more likely, not – to settle any grievances through arbitration rather than through a class-action lawsuit.
“Working people pay the price when large financial institutions like Wells Fargo and Equifax use forced arbitration to cover up egregious cheating,” Sen. Sherrod Brown said Monday. “While the Treasury Department cherry-picked arguments, the CFPB’s comprehensive report on forced arbitration demonstrates that hard-working Americans benefit when they get their day in court.”
This is what the GOP rollback does – it allows you to be Equifax’d in all kinds of agreements with financial firms.
This is why Democrats are in tizzy. It’s as if their Republican colleagues live in a world where their constituents were not affected (and infuriated) by these shenanigans just weeks ago.
In fact, it’s almost as if the GOP’s constituents are bank lobbyists. At least, that’s how Wall Street analysts make it sound. According to their notes, the GOP is doing this for all the little guys out there in the finance world who are getting crushed – you know, like JPMorgan and Wells Fargo.
“The result would spell a big victory for Republicans and a welcomed relief for banks and specialty finance companies ranging from purveyors of mortgages, payday loans and student loans… and, yes, credit reports,” The Washington Post quoted one analyst as saying.
Can I get some relief?
Relief from what, pray tell?
Wall Street is doing just marvelously and has been – blips aside – since earnings turned the corner around 2012. This argument is yet another example of the GOP and Wall Street trying to sell the American people the myth that corporate America is suffering, when in fact it’s doing just fine.
One of the biggest purveyors of this myth is JPMorgan CEO Jamie Dimon. His lobbyists now will most likely get a big high five, and his struggling postcrisis firm will get some much-needed relief.
From 2008 through 2016, JPMorgan laid off almost 27,000 employees. Yet, during that same period, Dimon’s compensation hit over $27 million – a 39% pay raise. The bank also had enough cash lying around to buy back $37.8 billion in stock during that period, which had to help Dimon and other company executives – who are paid largely in stock – quite a bit.
Does it sound to you as if this is an industry in need of relief from class-action lawsuits?
This is also another example of the Treasury trying to sell us the myth that what’s good for corporate interests is good for American workers. A few weeks ago, Treasury Secretary Steve Mnuchin removed a 2012 report that indicated the contrary from the Treasury’s website.
What’s weird about all of this is that getting rid of this rule – a move that should outrage so many Americans – is being heralded as a GOP victory. The Republicans are finally doing something.
But who are they doing it for?