Wednesday, October 25, 2017

Jeff Flake's Speech and the GOP vs. the CFPB

Senator Jeff Flake, R-Arizona, in announcing his retirement, gave a stirring speech that is being lauded by political pundits in the New York Times and elsewhere as boldly principled, even heroic.

It is great that Sen. Flake decided to stand up against Donald Trump, a man who thinks it is a good idea to pick fights with widows of slain American soldiers.

It's just a shame that Sen. Flake showed a decisive lack of boldness and heroism in willingly serving as one of 48 lackeys who combined with the bootlicker-in-chief to kill a sensible rule to protect the American consumer, worker and taxpayer from Wells Fargo and other financial entities.

Flake joined with forty-seven other Republican Senators, and zero Democrats, to overturn a rule being considered by the Consumer Financial Protection Bureau (CFPB) - the single greatest advent of the Obama era - to put the screws to arbitration.  These forty-eight shills of the finance industry were joined by Vice President Mike Pence, who provided the tie-breaking vote.

The New York Times, which often engages in sensationalist reporting, nonetheless does do much excellent reporting, and its coverage of arbitration is a must-read.  The long and the short of it is that arbitration clauses, inserted into contracts between employer and employee, between credit card user and credit card issuer, and elsewhere, essentially circumvent the US court system.  Yes, your acceptance of any of these contracts is "voluntary", but good luck getting by in this day and age without, for instance, a phone.

The CFPB has been considering, for five years, a rule that would have essentially undone arbitration as it is currently practiced, and allowed broader use of class-action lawsuits to fight financial fraud.  Emphases added mine:

For decades, credit card companies and banks have inserted arbitration clauses into the fine print of financial contracts to circumvent the courts and bar people from pooling their resources in class-action lawsuits. By forcing people into private arbitration, the clauses effectively take away one of the few tools that individuals have to fight predatory and deceptive business practices. Arbitration clauses have derailed claims of financial gouging, discrimination in car sales and unfair fees.

The new rule written by the consumer bureau, which was set to take effect in 2019, would have restored the right of individuals to sue in court. It was part of a spate of actions by the bureau, which has cracked down on debt collectors, the student loan industry and payday lenders 


Looking to head off a repeal, Democrats and consumer advocates branded the effort as a gift to financial institutions like Wells Fargo and Equifax. Both companies, in the face of corporate scandals, used arbitration clauses to try to quash legal challenges from customers. (NY Times)

Listen, let's call a spade a spade here.  This is not an especially nuanced issue.  Ending this CFPB rule is a direct middle finger to any American who's been screwed over by (or stands to be screwed over by) a financial institution.  No company is being badly hobbled by the threat of class-action lawsuits.  Republicans estimate class-action lawsuits could cost financial firms $500 million in legal fees.  Accordingly to Fidelity, the U.S. finance sector has a capitalization of $7.59 trillion dollars.  Even if legal fees ballooned to 100 times the size of what Republicans estimate, they'd still be a drop in the bucket for the finance sector.

Who's being helped here?  Wells Fargo? Equifax? Come on, EQUIFAX?  The student loan industry?  The debt collection industry?  I'm going to politely suggest these companies and industries should be sued, over and over again, until they either no longer exist or are run under completely different conditions, by completely different people.

As for our elected representatives, they are sell-outs.  Donald "Drain the Swamp" Trump is a sell-out, and Jeff Flake is also a sell-out, even if he gives a fine speech.

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