Democrats Use Equifax, Wells Fargo to Defend Rule on Bank SuitsBy
Schumer wants to stop GOP from killing CFPB’s arbitration rule
Senate minority leader calls Republican effort ‘outrageous’
Congressional Democrats are using major scandals at Equifax Inc. and Wells Fargo & Co. to ramp up their push to stop Republicans from killing a controversial rule that would make it easier for consumers to sue financial firms.
In a press conference Wednesday, Senate Minority Leader Chuck Schumer called GOP efforts to reverse a Consumer Financial Protection Bureau regulation that restricts how companies use closed-door arbitration a "get-out-of-jail-free card" for Equifax and Wells Fargo.
Democrats held their briefing just days before Equifax executives are slated to testify on Capitol Hill about a cyberbreach that resulted in the theft of more than 143 million Americans personal data, and Wells Fargo Chief Executive Officer Tim Sloan is scheduled to answer additional lawmaker questions about the millions of bogus accounts the bank opened without customers’ consent.
“It’s outrageous," Schumer said, standing alongside colleagues including Massachusetts Senator Elizabeth Warren, one of Wall Street’s loudest critics in Congress. “We will do everything we can to fight and defeat it," Schumer said of any Republican effort to overturn the CFPB rule.
At issue is the CFPB’s July decision to restrict financial firms from forcing consumers to resolve disputes through arbitration, thus preventing them from banding together to file class-action lawsuits. Consumer advocates argue that if Republicans overturn the CFPB, banks can’t be held accountable for cheating customers. GOP lawmakers argue the main beneficiaries will be plaintiffs lawyers and that the CFPB based its regulation on flawed methodology.
Senate Republicans are relying on the Congressional Review Act to reverse the rule, which means they have a limited window of time to pass legislation. The GOP-controlled House passed their version of the bill in July.
Republicans have been pushing Senate leaders including Mitch McConnell to bring the issue to a vote, but their efforts have been complicated by Equifax’s response to its massive cyberbreach.
When consumers signed up for Equifax’s free credit monitoring earlier this month, they were required to sign a contract that would restrict their ability to sue the company. Equifax later amended its policy following backlash from customers and Democratic lawmakers.
Senate Banking Committee Chairman Mike Crapo, who is sponsoring the Senate version of the legislation, said earlier this month that the Equifax breach had become "an issue," and could make it more difficult to secure enough votes to repeal the CFPB rule. Republicans can only afford to lose two members.
Rick Smith, who stepped down Tuesday as Equifax’s CEO, is scheduled to testify before the House Energy and Commerce Committee Oct. 3, while the Senate Banking Committee is expected to hear from him Oct. 4.
Separately, Wells Fargo’s Sloan will appear before the Senate banking panel Oct. 3 to provide an update on the bank’s phony account scandal. While it’s been more than a year since Wells Fargo was fined by regulators over its misconduct, the bank drew renewed criticism from lawmakers last month when it disclosed that 3.5 million total accounts may have been opened, 67 percent more than initially estimated.