The Finance 202: Wall Street will soon test its clout with Senate Republicans – Washington Post
Big banks are about to find out how far Senate Republicans will go to get them out of a jam.
The Consumer Financial Protection Bureau dropped a hammer blow on the industry Monday by adopting a rule that will allow consumers to bring class-action suits against financial firms. The move prohibits banks from tucking mandatory arbitration clauses into contracts for credit cards, bank accounts and other financial products. For years, those binding agreements forced customers to waive their right to sue in the event of a dispute.
The CFPB has been working on the rule effectively since its inception — the 2010 Dodd-Frank law that created the bureau also gave it explicit authority to ban the practice. But industry lobbyists and activists alike agreed Monday that the rule’s finalization amounts to the CFPB’s most significant action in its five-year history.
The outline of an industry-backed plan to roll the rule back is already taking shape. Working through their Washington trade associations, banking interests plan to lean on congressional Republicans to scrub the rule from the books.
GOP lawmakers can do that with simple majority votes in both chambers by using the Congressional Review Act, a little-used 1996 law that Republicans employed to erase 14 Obama-era rules earlier this year. House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) in a Monday statement signaled House Republicans will move to do just that: “As a matter of principle, policy, and process, this anti-consumer rule should be thoroughly rejected by Congress under the Congressional Review Act,” he said.
The law allows Republicans to nullify new federal regulations with simple majorities in each chamber, meaning Senate Republicans could do so without having to meet the typical 60-vote threshold for action. Lawmakers must act within 60 legislative days of the rule’s publication in the federal register, a clock that should start ticking within the next couple of weeks.