The Trump administration is moving to deny Americans their day in court when they have been wronged.
The Centers for Medicare and Medicaid Services want to reverse an Obama-era regulation that bars most nursing homes from forcing residents to agree to resolve disputes in private arbitration, instead of in court. The Department of Education recently announced that it was working to reverse an Obama-era rule that prevents most for-profit colleges and other schools from enforcing arbitration agreements when resolving loan disputes by students.
Now, congressional Republicans are getting into the act by attacking a new rule, issued by the Consumer Financial Protection Bureau, that will let Americans bring class-action lawsuits against banks instead of being forced into arbitration. Without the rule, which is scheduled to apply to transactions next year, banks could continue to profit from abusive products and practices without ever facing a court challenge, and aggrieved customers would continue to be shunted into arbitration. Class-action lawsuits are often the only way to hold corporations to account for wrongdoing in which thousands or millions of customers lose amounts that may be meaningful for each customer, though not enough to warrant an individual fighting a corporation. Arbitration, in contrast, is so clearly stacked against customers that most people don’t even bother. And yet, arbitration has been the only recourse even in cases where customers were defrauded, like those caught up in the still-unfolding scandals at Wells Fargo who could not sue because of the bank’s mandatory arbitration requirement.
The first attempt to derail the rule failed recently, but it underscored the administration’s support for industry arguments. Keith Noreika, a bank lawyer appointed by President Trump to oversee national banks until a Senate-confirmed regulator is in place, asked the financial protection bureau to delay the rule on the ground that more time was needed to determine if it would destabilize the banking system. The bureau refused, for good reason. The rule — which will cost banks about $1 billion a year out of more than $171 billion in profits, according to analysis by the bureau — does not threaten the banks’ survival; it only threatens their impunity. Moreover, neither the agency that Mr. Noreika temporarily heads, the Office of the Comptroller of the Currency, nor other financial regulators raised safety-and-soundness concerns during the long rule-making process.
Congressional Republicans continue to threaten the rule. Before their summer break began, House Republicans passed legislation to scrap it, using the fast-track procedures of the Congressional Review Act. Companion legislation has been introduced in the Senate. Before this year, the review act’s procedures had been used only once, by the Republican-controlled Congress of 2001, to invalidate a workplace safety rule from the Clinton administration. This year, Republicans have used it to roll back 14 rules finalized near the end of the Obama years, including labor and environmental protections. The difference this time is that they want to repeal a rule from Mr. Trump’s watch, albeit by an Obama-appointed regulator of the financial protection bureau, an agency Republicans love to loathe.
If Senate Republicans, once again blinded by their antipathy to President Barack Obama, vote to repeal this rule, they will join their House colleagues and the Trump administration in closing the courthouse door to vulnerable, victimized and defrauded Americans.