Senator Warren Delivers Floor Speech in Support of CFPB Forced Arbitration Rule, Ahead of Possible GOP Repeal Vote Tomorrow
In Wake of Equifax Breach and Wells Fargo Scandal, Arbitration Rule is Crucial for Consumers
Washington, DC - In a floor speech on Monday evening, Senator Elizabeth Warren (D-Mass.) spoke in support of a rule recently issued by the Consumer Financial Protection Bureau (CFPB) that gives consumers who have been cheated the ability to hold their banks accountable. The CFPB's forced arbitration rule, which prevents banks and other financial firms from forcing customers to give up their rights to join class action suits, may be repealed by Senate Republicans as soon as tomorrow, according to reports.
During her remarks, Senator Warren highlighted support for the rule from The Military Coalition, AARP, and Main Street Alliance, despite the efforts of Senate Republicans and big banks to reverse it.
"It's amazing: not even a decade ago, the big banks sparked a financial crisis that hurt millions of working families. And while the big banks got a taxpayer bailout and are back to doling out multi-million dollar bonuses, a lot of working families are still struggling to recover," said Senator Warren. "Yet here in Congress, the Republican Party is still carrying water for the big banks. The big banks say 'jump,' and the Republican Party asks, 'how high?' The big banks tell Congress to take away their customers' rights to hold them accountable, and the Republican Party says, 'You bet!' The big banks say take those rights away right now - right on the heels of Wells Fargo and Equifax sticking it to millions of consumers - and the Republican Party, without an ounce of shame, says 'yes, sir - just keep those donations coming.'"
Senator Warren previously wrote to the CEOs of sixteen of the largest consumer banks in the country, asking for information about their bank's use of forced arbitration clauses and their position on the rule. Their responses highlighted the positive impact of the CFPB's arbitration rule and the industry's weak and misleading case for reversing the rule using the Congressional Review Act.
The text of her remarks is below. The full video is available here (YouTube).
Remarks by Senator Elizabeth Warren
September 25, 2017
*As Prepared for Delivery*
Wells Fargo creates 3.5 million fake accounts, charging customers fees and ruining credit scores. Equifax lets hackers steal personal information on 143 million Americans, putting nearly 60% of American adults at risk of identity theft. The Republican Party's response? Take away your legal rights to hold companies like Wells Fargo and Equifax accountable.
I know it sounds nuts. But it's true.
Here's the issue: If you have a checking account, or credit card, or private student loan, or any number of other financial products, there's a good chance you've given up your right to go to court if that financial firm cheats you.
That's because millions of financial contracts include a forced arbitration clause that says that if you want to legally challenge something the financial company did to you, you can't join with other customers in court - you have to go to arbitration by yourself.
Think about what this means in the real world. You wake up one morning and find a mysterious $30 fee on your account statement.
You call the bank and say, "hey, I didn't agree to this!" The bank tells you to pound sand. What are your options?
If there's no forced arbitration clause in your contract, you can join a class action lawsuit against the bank for free. Chances are you're not the only customer with an unauthorized $30 fee. A class action gives you a chance to get some money back. And just as importantly, the bank might have to cough up some real money and think twice before hitting you and their other customers with hidden fees again.
Now think about what happens if there is a forced arbitration clause. You can't join with other customers in court. Your only option is to file a solo arbitration claim - which will cost you $200 or more just to get started. Who's going to pay $200 upfront to get a $30 fee back? No one. And that's exactly what the banks are counting on. They can get away with nickel-and-diming you forever.
Earlier this year, the Consumer Financial Protection Bureau put a stop to that. They issued a new rule that prohibits financial companies from forcing you to give up your right to join a class action. The rule guarantees your right to join other customers in court and hold your bank accountable.
But Republicans in Congress are coming after the rule. House Republicans already voted to reverse the rule, and now Senate Republicans are gearing up to follow suit.
Make no mistake: anyone who votes to reverse this rule is saying loud and clear that they side with banks over their constituents - because bank lobbyists are the only people asking Congress to reverse the rule. Every other organization - all the ones that represent actual human beings, not banks - want the rule to be saved:
- The Military Coalition, which represents more than 5.5 million veterans and servicemembers, supports the CFPB rule because "our nation's veterans should not be deprived of the Constitutional rights and freedoms that they put their lives on the line to protect, including the right to have their claims heard in a trial." The Coalition says "the catastrophic consequences these (forced arbitration) clauses pose for our all-voluntary military fighting force's morale and our national security are vital reasons" to preserve the rule.
- The AARP, which represents nearly 40 million American seniors, says the CFPB rule should be preserved because it "is a critical step in restoring consumers' access to legal remedies that have been undermined by the widespread use of forced arbitration for many years."
- And the Main Street Alliance, which represents thousands of small businesses, says the CFPB rule will help small businesses fight against big financial firms that try to drive up their fees.
Veterans, servicemembers, seniors, small businesses, consumers - all lining up to support the CFPB rule. But that's not all. Let Freedom Ring - an organization that proudly touts itself as "supporting the conservative agenda" - likes the CFPB rule too, saying it is "in keeping with our Framers' concerns that without appropriate protections, civil proceedings can be used as a means to oppress the powerless."
That's the thing you have to understand. The effort to reverse the CFPB rule isn't about promoting a conservative agenda. And it's sure as heck not about promoting a working people's agenda. It's about advancing the donors' agenda. The big money agenda. That's it. Period.
It's amazing: not even a decade ago, the big banks sparked a financial crisis that hurt millions of working families. And while the big banks got a taxpayer bailout and are back to doling out multi-million dollar bonuses, a lot of working families are still struggling to recover.
Yet here in Congress, the Republican Party is still carrying water for the big banks. The big banks say "jump," and the Republican Party asks, "how high?" The big banks tell Congress to take away their customers' rights to hold them accountable, and the Republican Party says, "You bet!" The big banks say take those rights away right now - right on the heels of Wells Fargo and Equifax sticking it to millions of consumers - and the Republican Party, without an ounce of shame, says "yes, sir - just keep those donations coming."
The Republican Party will only stop carrying water for the big banks if you demand it. There are a lot of dollars on the other side, but your votes, your calls, your emails can make a difference. Tell your Senator to stand up to the big banks and vote no on this resolution.
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