Overshadowed by their Senate counterparts’ efforts to advance healthcare legislation, House Republicans voted Tuesday to cancel a Consumer Financial Protection Bureau rule meant to open up finance to class-action lawsuits, a move that kicked off a heated debate over the role of government.
The lower chamber voted 231-190 to undo the agency’s forced arbitration rule, which would restrict banks and other financial firms from preventing customers from joining in a class-action lawsuit by including provisions in contracts for financial products that steer complaints into private arbitration.
The vote pitted Republicans and the entire financial sector, who argued that the rule would benefit only trial lawyers, against Democrats and consumer and civil rights groups. “We’re going to fight to put leverage — who has the leverage? — put leverage back into the hands of the American people,” said House Minority Leader Nancy Pelosi of California.
The measure is a resolution under the Congressional Review Act, which allows Congress to strike down regulations with only 51 votes in the Senate. Democrats hope that enough Senate Republicans will split with their party to prevent the measure from reaching the desk of President Trump, whose White House has indicated that he will sign it.
“This rule will be a boon to frivolous lawsuits — and a drag on our economy,” wrote the resolution’s sponsors, Rep. Keith Rothfus of Pennsylvania and Sen. Tom Cotton of Arkansas, in a Forbes op-ed.
Finalized this month by CFPB Director Richard Cordray, an Obama appointee, the rule could provide a gauge for the viability of another planned rule stuck in limbo: a sweeping regulation of payday loan products. With Republican control of Congress, rulemaking is a roll of the dice. It would be a major setback for the bureau to have a rule overturned through the Congressional Review Act, because the law would prevent the agency from issuing any similar regulation without congressional authorization.
At a press conference Tuesday morning, Democratic leaders suggested that they would not counsel Cordray against putting out the payday lending rule, even with the threat of a GOP Congressional Review Act challenge.
“What makes the Consumer Financial Protection Bureau strong is it doesn’t play politics,” said Sen. Elizabeth Warren, D-Mass.
While Republicans had the support of bank and payment card trade groups on using the Congressional Review Act to kill the class-action rule, left-of-center groups touted polling Tuesday that showed strong support for keeping the bureau’s rule. When asked if it was necessary to hold companies accountable or if it would only encourage frivolous lawsuits, two-thirds of respondents approved of the rule, according to a nationwide poll of 1,000 voters conducted by Lake Research Partners for Americans for Financial Reform and the Center for Responsible Lending, two groups that back tighter financial regulations.
Conservative groups, meanwhile, lined up behind Republicans. Heritage Action, the political arm of the conservative Heritage Foundation think tank, told lawmakers that it would be “key-voting” a “no” vote, noting that ultimately Congress should eliminate the bureau altogether.
