For Immediate Release:
Senate Hands Gift to Wall Street for Second Time in Less Than Six Months
Instead of Pandering to Big Banks, Lawmakers Should Focus on Strengthening Financial Protections for American Consumers
The U.S. Senate today voted [67-31] to roll back crucial banking safeguards that were installed after the 2008 financial crisis to prevent a repeat of the near-collapse of the U.S. economy. This vote – choosing Wall Street demands over consumers’ needs – comes less than six months after the Senate voted to repeal the arbitration rule issued by the Consumer Financial Protection Bureau. The arbitration rule had restored consumers’ right to band together in court against bad actors in the financial industry.
S.2155, or the Economic Growth, Regulatory Relief, and Consumer Protection Act, “is being pushed under the guise of protecting community banks, but in reality would weaken protections for homeowners and expand the scope of risky activity for big banks and lenders to engage in at the expense of American consumers and the economy,” the National Association of Consumer Advocates said in a letter to the U.S. Senate.
S. 2155 would remove reporting requirements that help to deter housing discrimination; eliminate safeguards for buyers of manufactured housing; and remove escrow account protections and appraisal requirements for certain borrowers; eliminate requirements for special post-crisis risk controls at big banks. Inexplicably, the bill would also favor credit reporting agencies like Equifax, the institution that was at the center of a security data breach that impacted half the American population.
“This legislation was an unfortunate reward to Wall Street lobbyists, and if it becomes law, unsuspecting American consumers will pay the consequences,” said Ira Rheingold, NACA’s executive director. “Lawmakers should throw away this bill, and instead should consider meaningful proposals that would protect Americans from deceptive, fraudulent and risky conduct by the big banks, payday lenders, and the credit bureaus.”
Are there legitimate ways to improve small and large banking and consumer lending without the harmful proposals in S. 2155? Yes.
Some senators have introduced legislation that NACA would strongly support, including proposals that would protect military members in their transactions with big banks and lenders; provide safeguards for borrowers of private student loans; protect customers of auto dealers and auto financing companies; and promote reasonable usury rates for credit cards and bank loans.
Finally, lawmakers can restore meaningful access to remedies to those who are wronged by the risky conduct of big banks and lenders. Last October, the U.S. Senate made another wrong move when it voted 51-50 (with the vice-president’s tie-breaking vote) to nullify a CFPB rule that would ensure that consumers can band together in class actions against financial institutions that cheat, deceive or cause other harm. The Senate may have taken it out of the CFPB’s hands for now, but Congress should revisit this much needed consumer protection and pass a law that outright bars financial institutions from including forced arbitration clauses and class action bans in their terms of service with their customers.
The bill heads to the U.S. House of Representatives, which recently has passed even more extreme proposals that favor big banks and predatory lenders over consumers and the U.S. economy.