(FinancialPress) – Customers may now be blocked from forming class action suits against banks and other financial institutions. On Tuesday, the U.S. Senate put and end to a ruling that forced the term “forced arbitration“ out of firms‘ contract clauses.
Vice-President Mike Pence appeared in his role of chamber‘s president and cast the tie-breaker, as the House found itself in a 50-50 vote stalemate. This marks the most significant roll-back of financial policy instituted during the Obama administration since President Trump was sworn in and declared he‘d give Wall Street more freedom of movement. In the end, the tally was 51-50.
The House of Representatives, which has a Republican majority, has already resolved to repeal the Consumer Financial Protection Bureau (CFPB), which had been released in July. It also resolved to ban similar institutions from being formed later down the road by bars regulators.
Once Trump signs the resolution, it will bring a harsh end to an effort lobbied for by federal regulators, financial lobbyists and consumer advocacy groups.
Richard Cordray – Director of the CFPB, was appointed during former president Barack Obama‘s administration. Known as a man of few comments, he couldn‘t avoid voicing his opinion on Tuesday night. “Wall Street won and ordinary people lost,“ he said
He added: “This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company.“
With this ruling, consumers find themselves bound to take any and all disputes to closed-door arbitration instead of being able to join class-action lawsuits. Class-actions allow complainants to pool in on litigation costs. These clauses have become a standard for practically every consumer product in the United States since being ruled legal in 2011 by the Supreme Court.