The House voted Tuesday to repeal a controversial new rule from the Consumer Financial Protection Bureau (CFPB) that would have protected consumers’ rights to sue banks in class-action lawsuits.
Lawmakers voted 231-190 to repeal the rule using the Congressional Review Act, a law that allows Congress to eliminate regulations within 60 days of their release and bars agencies from issuing similar rules in the future. Only one Republican, Rep. Walter Jones (N.C.), joined Democrats in voting against repeal.
The repeal resolution will now move to the Senate. Republicans will need near-unanimous support from their slim majority to pass it in the upper chamber.
President Trump is expected to sign the bill if it reaches his desk. The White House said Monday it “strongly supports” the repeal effort.
The effort to repeal the arbitration rule is only the flashpoint in a long-running fight between Republicans and the CFPB.
The rule forces companies to write arbitration clauses included in contracts in ways that would not prevent consumers from joining class-action lawsuits.
It also mandates that financial firms hand over information about “initial claims and counterclaims, answers to these claims and counterclaims, and awards issued in arbitration.”
Arbitration clauses are commonly included in customer contracts to help banks or businesses avoid lawsuits from consumers who say they have been defrauded or abused.
Tuesday’s vote was also a quick rebuke for a rule that was only issued earlier this month.
The rule brought immediate opposition from business groups and the financial industry. Critics said it was an abuse of the CFPB’s powers and claimed the rule limits consumer choices and makes it harder to collect from bad actors.
The U.S. Chamber of Commerce and several major bank lobbying groups urged Congress to repeal the rule within hours of its release, and top Republicans in both chambers unified against the bill.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that “as a matter of principle, policy and process, this anti-consumer rule should be thoroughly rejected” after its release.
Senate Banking Committee Chairman Mike CrapoMike CrapoOvernight Finance: House votes to repeal consumer bureau arbitration rule | Trump considers Yellen, Cohn to lead Fed | Business groups push for tax reform action House votes to repeal consumer arbitration rule Senators urge quotas on Canadian lumber, consultations with Congress MORE (R-Idaho) said it was “incumbent on Congress to vote to overturn this rule.”
Crapo also criticized a study conducted by the CFPB, which the agency used to justify the rule.
The CFPB reported that more than 34 million consumers received $1 billion in payments from lawsuits over the past five years, but that arbitrators awarded only a total of about $360,000 in relief to 78 consumers in two yearsof cases the agency studied.
The CFPB announced its intent to issue an arbitration rule last year, following reports on the potential harms to consumers from arbitration clauses, including being prevented from joining class-action lawsuits.
“Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” CFPB Director Richard Cordray said at the time.
“Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.”
When he introduced the bill, Cordray told reporters he knew that Republicans in Congress could repeal the rule but insisted it was needed to protect consumers.
Democrats defended the rule Tuesday, saying that it guaranteed consumers their day in court and was essential to protecting their due process from abusive banks and credit card companies.
Rep. Maxine Waters (Calif.), the top Democrat on the House Financial Services Committee, said “there is no sound public policy rationale for repealing” the CFPB rule.
“It is outrageous that Republicans are trying to nullify the rule to the detriment of consumers,” she said. “Republicans should think twice before taking away consumers’ rights to be heard in a court of law.”
Sen. Elizabeth WarrenElizabeth WarrenHouse votes to repeal consumer arbitration rule Warren issues warning on healthcare vote: ‘This is not a drill’ New Dem message doesn’t mention Trump MORE (D-Mass.), the architect of the consumer bureau, said the arbitration rule would “allow working families to hold big banks accountable when they’re cheated and help discourage the kinds of surprise fees that consumers hate.”
Both sides quickly mobilized ahead of Tuesday’s vote, which was scheduled only five days after lawmakers introduced their repeal resolution.
The Chamber, American Bankers Association, Consumer Bankers Association, Credit Union National Association and Financial Services Roundtable joined nearly a dozen groups in denouncing the rule in a Monday letter.
Conservative nonprofit Heritage Action announced Tuesday that it would negatively grade lawmakers who vote against repeal.
On the other side, Warren and Waters, flanked by House Minority Leader Nancy Pelosi (D-Calif.) during a Tuesday press conference, blasted the GOP repeal effort as a move to “empower Wall Street.”
“Are you on the side of the consumers? The side of the consumer groups? The side of the faith groups? The side of veterans groups?” Warren asked. “Or are you on the side of the giant financial institutions?”
“The Republicans are advancing this bill because they’re on the side of the giant financial institutions,” she said.
This story was updated at 5:24 p.m.