Hang on to your hats, folks. I know you’re going to have a hard time believing this one. Are you ready? (You might need to sit down for this.)
OK, brace yourself: the US Senate just made it harder for Americans to sue banks.
I know, I know. I can hardly believe it either. But it’s true.
This all goes back to a ruling by the Bureau of Consumer Financial Protection that was posted to the Federal Register in July, passed into law on September 18th, and required compliance by March 19, 2018. Specifically, the rule states that:
“A provider shall not rely in any way on a pre-dispute arbitration agreement entered into after the date set forth in § 1040.5(a) with respect to any aspect of a class action that concerns any of the consumer financial products or services covered by § 1040.3, including to seek a stay or dismissal of particular claims or the entire action, unless and until the presiding court has ruled that the case may not proceed as a class action and, if that ruling may be subject to appellate review on an interlocutory basis, the time to seek such review has elapsed or such review has been resolved such that the case cannot proceed as a class action.”
Or, for those whose legalese is a bit rusty, the rule specifically prohibited the banksters from using fine print in contracts to stop customers from banding together in class action lawsuits. You know, in cases like, say, the Equifax debacle, where a credit monitoring company let sensitive personal information on as many as 143 million Americans fall into the hands of data thieves (oopsies!). As it turns out, Equifax had just such an anti-class action clause in their consumer contract until massive outrage made them remove it.
So this rule might have helped some of the more hapless victims of the financial vultures from falling into the fine print trap and losing their ability to sue the bank when things go disastrously wrong.
…Unless the Senate stepped in and used the Clinton-era Congressional Review Act to overturn that ruling. But of course they would never do that, would they?
Oh, yes. Of course they would. And they did. In a 51-50 vote on Tuesday night, the Senate shot down the rule and gave the green light to the banksters to continue fleecing their victims. I mean “customers.”
Now of course this is no surprise to anyone who is a regular reader of this column.
Remember that Obama’s Attorney General, Eric Holder, actually admitted that the Wall Street fat cats were “too big to jail” during a Senate Judiciary Committee hearing in 2013.
Remember that only one top-level Wall Street exec was
thrown under the bus jailed for the 2008 meltdown.
Remember that HSBC was caught laundering drug money, helping terrorists and violating the Trading With the Enemy Act in a series of explosive scandals four years ago…and got off scot-free.
Heck, remember that not a single exec went to jail for participation in the Libor rate rigging scandal, alternately known by followers of The Corbett Report as “the biggest financial fraud scandal in the history of the world” and by members of the general public as “Li-what?”
No, it is no surprise whatsoever that neither the US Senate nor any other branch of the government is interested in helping the people against the bankers.
But it’s important to understand what the real problem is so that we can understand the real solution. The real problem isn’t that the government isn’t stepping in to regulate what agreements can or cannot be contracted between banks and their customers. This latest Senate ruling isn’t a failure of the regulatory system, it is the regulatory system. (See my podcast episode on The Regulation Trap and my episode on Upton Sinclair’s The Jungle for those poor souls who haven’t yet figured out that the entire function of the government’s regulatory bodies is to help the banksters and their corporate cronies crush their competition.)
The real problem is that the average Joe Sixpack and Jane Soccermom trust the Bureau of Consumer Financial Protection and other such austere-sounding regulatory bodies to actually function in their interest. Newsflash: they don’t.
And since the real problem is the false security blanket of government regulation itself, then the answer is obviously not going to come from slapping on another layer of government regulation, even if the government were inclined to do so (which it’s not). The real solution, then, comes from consumers using their power to make the banksters do their bidding.
The greatest trick the banksters and their corporate cronies have ever pulled is to convince you that you are weak and powerless without their governmental puppets and regulatory lapdogs to (pretend to) protect you. That is a lie. The people have always held that power in their own hands. It is only a question of whether they are aware of that power and willing to flex some muscles in order to wield it.
Let’s look at the Equifax example again. This credit monitoring “service” inserts a fine print clause barring customers from class action lawsuits and then proceeds to give up the data on 143 million of those customers in the largest data breach in history. The outrage is overwhelming, the CEO steps down, and Equifax, having no alternative, revokes the clause.
The ability to sue or not sue had nothing to do with the government. The ability to join a class action lawsuit against Equifax didn’t come from the Bureau of Consumer Financial “Protection.” It can’t be taken away by the US Senate. If you look closesly, the mockingbird dinosaur media even admit this.
The power was in the customers’ hands all along. All they had to do was recognize that power and use it.
There are numerous examples of just this phenomenon, but they all involve the public deciding to take matters into their own hands and press the case.
(On one final note, there is also a general ignorance of contract law among the general public that leads them to believe that just because there is some fine print in a contract that they are thereby legally obligated to abide by that fine print, whatever it says. Newsflash: they’re not. People who don’t know how contract law works are highly encouraged to familiarize themselves with the writing and lectures of Stephan Kinsella.)