GOP Will Always Take Care Of The Plutocrats – Wall Street Edition
The present Republican party may be in the process of disintegrating but its current and continual raison d’etre is simply to make sure it takes care of its plutocratic class of donors. That is what is prompting the current Republican claims that passing a massive tax cut for the rich and an enormous corporate giveaway is an essentially existential requirement for the party. It is also what is driving the deconstruction of the regulatory state.
That effort took another giant step yesterday when the Senate voted to roll back the new CFPB regulation that would have allowed consumers to band together in class action suits against banks, credit card companies, and other financial institutions. That rules was supposed to go into effect in the beginning of 2019. The tiebreaking vote was cast by Mike Pence and it should be noted that both Flake and McCain voted for the roll back.
The end result is that consumers will now still be forced into arbitration when they have disputes with these financial institutions. As the Times notes, “By forcing people into private arbitration, the clauses effectively take away one of the few tools that individuals have to fight predatory and deceptive business practices. Arbitration clauses have derailed claims of financial gouging, discrimination in car sales and unfair fees.”
The most recent egregious examples of this predatory behavior comes from Wells Fargo and Equifax. Wells Fargo criminally opened millions of fraudulent accounts in the name of its customers, simply to generate more fees and commissions for its salespeople. But, even thought those accounts were opened by fraud, the bank still insisted that individuals go through arbitration in order to recoup the money that was stolen from them.
Equifax insisted that those people who wanted to sign up for its “free” credit monitoring (that turned out not to be free at all) in the wake of its massive data breach also had to sign a clause that would force arbitration for claims against the firm prompted by that breach.
The beauty of forced arbitration for these companies, besides the fact that the process is already stacked against the consumer where the firms are sometimes even allowed to pick the arbitrator, is that it encourages small theft across a broad range of customers. When you are getting ripped off for $20 or $30 dollars, who has the time or sometimes the money to fight the company the get it back. But extend that across 100,000 consumers and lo and behold it is a $2 to $3 million windfall for the company. Do that over time, and the money really starts to add up.
Of course, the whole effort to sustain forced arbitration has been abetted by the Supreme Court that basically enshrined these clauses into law with decisions in 2011 and 2013. The ruling in 2011 was exceptional (but perhaps not for the Roberts Court) in that it ignored the existing law and precedent and decided mandatory arbitration could not be prevented by the states because, according to Scalia, “defendants [i.e. corporations] will be pressured into settling questionable claims.” As if corporations ever settle anything without extracting as much time and money from the claimants as possible in the hopes that they will run out of money or simply tire of the fight.
I’m not sure that the Trump voters pulled the lever to protect Wall Street firms and allow them to continue to rip off consumers with impunity. Nor am I sure they voted for tax cuts for the rich and multinational corporations. But that’s what they are getting.
It might be worth noting that Tim Kaine never would have cast the tiebreaking vote to roll back this rule. Nor would Hillary Clinton have signed it. But that doesn’t matter because she gave a few speeches to Wall Street…
