Too many Americans who get cheated by banks will continue to be forced into binding arbitration, thanks to Congressional Republicans including all five from Iowa.

Tuesday night, Senators Joni Ernst and Chuck Grassley joined 48 of their Republican colleagues and Vice President Mike Pence to pass a resolution overturning a new federal rule.

The Consumer Financial Protection Bureau’s rule would ban banks and credit card companies from using clauses in customer contracts that protect them from class-action lawsuits.

So-called forced arbitration clauses require customers to resolve any disputes with the firm through a third-party mediator and bans them from suing the company.

House members voted along party lines to overturn the same rule in late July. Republican Representatives Rod Blum (IA-01), David Young (IA-03), and Steve King (IA-04) all sought to protect banks from class-action lawsuits by defrauded consumers. Iowa’s lone Democrat in Congress, Representative Dave Loebsack (IA-02), opposed the legislation.

President Donald Trump is expected to sign the resolution soon.

Grassley, Ernst, Blum, Young, and King didn’t call attention to this vote. None issued a press release or bragged on their social media feeds about their handiwork for large corporations. With the rule dead, not only will banks face fewer consequences for taking advantage of customers, Equifax can now continue to trick Americans affected by their data breach into giving up their right to sue.

Some GOP politicians have claimed consumers are better served by binding arbitration than class-action suits. Don’t believe it. When the Consumer Financial Protection Bureau published the rule in July, Roger Yu reported for USA Today,

“The biggest step has been taken. This is a huge victory for consumers” said Amanda Werner, campaign manager at Americans for Financial Reform and Public Citizen. “We expect a lot of misconduct is going to be rooted out sooner.”

Wells Fargo’s much-maligned fake-account scandal, revealed in 2013 by a Los Angeles Times report, would have been more widely known sooner if the arbitration clause hadn’t been in its contracts, she says. Consumers have repeatedly sought to sue the bank for years for the bank’s practice of creating unauthorized checking and credit card accounts. “But their case has been kicked out over and over again” because of the arbitration requirement, Werner said. […]

Odds are stacked against consumers when it comes to arbitration. They lack the institutional knowledge of banks whose legal teams are familiar with arbitrators. And that’s partly why there are so few arbitration cases. Only about 400 consumers file arbitration per year against financial companies.

The likelihood of consumers winning in arbitration is also low. Only 9% of consumers win in arbitration against financial companies, the consumer bureau said in a report.

Compared to lawsuit outcomes, arbitration also leads to smaller payouts for consumers. In studying the five-year period from 2008 to 2012, the bureau said over 34 million harmed consumers received payments of about $1 billion that were ordered by judges or juries in lawsuits. But in about 1,000 cases in the two years that the bureau studied, arbitrators awarded about $360,000 to 78 consumers.

Jim Puzzanghera reported for the Los Angeles Times on October 25,

Bureau Director Richard Cordray called the Senate vote “a giant setback for every consumer in this country” and urged Trump to veto the repeal legislation.

“It robs consumers of their most effective legal tool against corporate wrongdoing,” Cordray said. “As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.” […]

The Review Act was put in place in 1996 to give Congress the expedited ability to repeal new rules put in place by federal regulators. Such a measure needs only a simple majority vote in the Senate, so opponents cannot block it with a filibuster.

The act had been used successfully just once before this year, because it usually is only relevant when the presidency shifts parties and a new administration wants to invalidate actions of a previous one. […]

The consumer bureau had determined that the effect on the entire financial system would be less than $1 billion a year. Cordray has noted that U.S. banks earned a record $171 billion in profits in 2016.

Congressional Republicans have tried to undermine the Consumer Financial Protection Bureau in other ways this year as well. Blum, Young, and King voted in June for a broad bill that would “devastate financial regulation.”

Any relevant comments are welcome in this thread.

P.S. to progressives who claim both major parties are equally servile to Wall Street: not a single Democrat in the U.S. House or Senate voted for this resolution.