Senator Elizabeth Warren (D- Mass.) fired off letters to CEO’s of the nation’s top financial firms, calling on them to publicly reveal their positions on a lobbying effort in their name aimed at striking down new consumer protections.
In her missive, Warren noted that interest groups that represent the firms, like the US Chamber of Commerce, the American Bankers Associated, and the Financial Services Roundtable, have been ginning up support to repeal a recently-implemented Consumer Financial Protection Bureau (CFPB) rule against forced arbitration.
The rule, which took effect last month following a public comment period and years of research and analysis by the independent watchdog agency, prohibits firms from crafting contracts with customers that remove the future possibility of class action lawsuits.
“These organizations represent your bank and your industry, but you—and other CEOs of large banks—have remained silent on the rule,” Warren wrote.
“If your lobbyists are taking such strong positions against the rule, is there a reason both you and your bank have been unwilling to take a public position?” she went on to ask.
In its research, the CFPB found that a significant amount of financial contracts, affecting tens of millions of Americans, contained forced arbitration clauses that require an aggrieved customer to settle one-on-one with the bank, instead of pooling legal resources with other defrauded customers.
Warren’s letter added that in arbitration proceedings, consumers find some form of relief in only 20 percent of their claims. In most cases, Americans were completely unaware of the forced arbitration languages in their contracts. The CFPB found only 7 percent of consumers knew what it meant or that it even existed.
Congressional Republicans are trying to stop the rule in its tracks. With the wind of the banking lobby at its back, the House passed legislation last month that would prevent the CFPB from implementing its forced arbitration rule.
A similar bill in the Senate has 30 cosponsors. It was reportedly not advanced before the August recess, in part, due to the absence of Sen. John McCain (R-Ariz.). Legislation brought under the Congressional Review Act only needs 51 Senate votes to pass, circumventing filibuster requirements.
Sen. Warren also called on the bank CEOs to provide data on their use of forced arbitration clauses, and how they fared in arbitration proceedings. She asked the firms to respond by September 1, citing how quickly GOP lawmakers are moving to kill the rule.
In receipt of Warren’s letter were the heads of 16 of the largest US financial institutions, including JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup Inc.
Wells Fargo has made headlines, in recent months, for using forced arbitration clauses to stop lawsuits brought by customers who were systematically sold new products without their consent.
