The financial crisis in 2008 was the worst since the great depression more than 75 years earlier. Upon reflection, it can be determined that many of the contributing factors can be traced back to misleading claims, bad lending, and poor regulation. Combine this with the fact that many lenders wouldn’t even require proof of income to approve unaffordable loans that would surely end in bankruptcy and an already unstable economy and you’ve got yourself a foreclosure crisis.
In an attempt to reign in deceptive credit card practices, predatory payday loans and multiplying bank fees the Obama Administration proposed the creation of a new Consumer Financial Protection Agency. In essence, the agency would take over all federal regulations of the banks in one office, in the best interest of everyday Americans. The Democrats felt that the CFPA would give consumers important protection against mistreatment by banks as well as making sure lenders act transparently and do not take advantage of consumers. (for the official documents visit congress.gov H.R.3216-111th)
July of 2017 Richard Cordray, director of the CFPA announced a new rule that would put limits on mandatory arbitration which passed in a 50-51 vote. Meaning, before the rule there was fine print in contracts that protected banks from a class action lawsuit or a group of people suing the banks through one lawyer. The rule would have also required banks to remove “confusing or misleading language and fine print” from all contracts by March of 2018. Americans pay a staggering $35.8B in overdraft fees annually due to many of these practices. Naturally, there was an immediate backlash from large banks, as well as the Association of National Advertisers due to the stricter rules on misleading marketing. Even 45 was in opposition stating “only the big law firms will benefit” while also calling the CFPA policies “uninformed” & “ineffective”.
Fast forward to October and just as with many of the ACA policies congress waited the 60 days to repeal or squash years worth of effort. In a tied-vote Mike Pence was called upon to cast the final decision, he voted to nullify the ruling. Senator Elizabeth Warren, who has led those opposed to the nullification put it best right before the vote-
“This bill is a giant wet kiss to Wall Street. Bank lobbyists are crawling all over this place, begging Congress to vote and make it easier for them to cheat customers”
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