Note the wording of the headlines in some of the press coverage. This one – Wall Street wins big as Senate votes to roll back regulation allowing consumers to sue their banks — seems right in part. Yes, Congress's decision to kill the CFPB's arbitration rule may be seen as a big win on Wall Street, at least in the short term, because businesses in the financial services industry will be able to cheat consumers without answering for their misdeeds in court — or anywhere else, because cheated consumers, acting rationally, almost never individually arbitrate claims against large corporations.
But you don't tell the whole story if you characterize the CFPB's rule simply as "allowing" consumers to sue banks.
And so, these two headlines — Senate votes to kill new rule allowing class-action lawsuits against banks after Pence casts deciding vote, Consumer Bureau Loses Fight to Allow More Class-Action Suits – get the problem wrong. Only seen from the perspective of big business does the CFPB's arbitration rule "allow more" class-action suits, as if consumers going to court to redress mass wrongs would disrupt the long standing status quo.
To me, these headlines buy into the Chamber of Commerce's pitch — that normal is a world without consumer access to courts, in which businesses can cheat, while consumers have no realistic opportunity to recover their losses or put an end to the cheating. But that's not normal. It's inconsistent with our legal tradition that most rights violations can be redressed in court. And it's not the world envisioned by state legislatures across the country, which decades ago enacted state unfair and deceptive practices laws authorizing private suits to recover against cheating businesses.
No, to say that the CFPB's arbitration rule would "allow more" class actions is to live in the world created just in the last couple decades or so by the Supreme Court, in decisions such as American Express v. Italian Colors. In those decisions, we learned that the Federal Arbitration Act (enacted in 1925) demands the enforcement of class-action bans laundered through pre-dispute, fine-print arbitration clauses, clauses that must be accepted by consumers lest they give up some basics of modern life (such as having a bank account or phone service).
UPDATE — Here are some newspaper headlines that strike me as more accurate: Late-night Senate vote protects banks over consumers, Congress Makes It Harder to Sue the Financial Industry, Lawmakers Just Made It Nearly Impossible For You to Sue Companies Like Equifax and Wells Fargo.
