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Congress strips protections from consumers

Last week, the Senate repealed a rule put in place by the Obama administration that gave consumers additional protection from rapacious credit card issuers and banks. The tie-breaking vote was cast by Vice President Mike Pence. The vote rolled back the rule that consumers could take their grievances to civil court and not be limited to resolving their conflicts in arbitration instead of class-action lawsuits.

Two GOP senators opposed measure

When the Senators cast their votes, all but two Republican senators voted to repeal the rule by the Consumer Financial Protection Bureau (CFPB) that took effect in July. It disallowed clauses to the contracts between customers and lending institutions and credit card companies that mandate dispute resolution be done via third-party arbitration.

The two dissenting GOP votes were cast by Louisiana's John Kennedy and South Carolina's Lindsey Graham. However, with VP Pence firmly in favor of his Republican colleagues' rollback of the rule, the vote came down to a 51-50 dissent.

House initiated rollback

The assault against consumer protections under the CFPB began in July when the House of Representatives voted to repeal the resolution over the summer congressional session. The GOP used the powerful Congressional Review Act to initiate the rollback. Under the Act, Congress has 60 legislative days in which to repeal any executive-branch rules after they are finalized.

Earlier this month, the Treasury Department published its analysis of the rule. In it, Treasury officials argued that keeping the rule in place would generate the filing of 3,000 additional class-action lawsuits over the coming half-decade. The suits would impose over $500 million in fees to defend these actions, allegedly awarding the sum of $330 million to attorneys for plaintiffs.

The Bureau countered argument

The CFPB disputed the Treasury's account, stating it was ""solidly refuted in the final rule."" In its own statement that was released, the Bureau said, ""Banks, credit unions and other companies file class-action lawsuits to pursue justice when they are harmed as a group, and our rule restores consumers' right to do the same.""

After analyzing the benefits and costs of the rule, the CFPB determined the mandatory arbitration clauses let corporations ""avoid accountability for breaking the law."" Additionally, by barring class-action litigation in these matters, Congress will cost consumers billions of dollars, the CFPB claimed.

According to the Bureau, in the last five years, a billion dollars was disbursed to consumers as a result of such class-action payments. Alternatively, the $360,000 that 78 consumers received via arbitration over a two-year period appears to be quite paltry indeed.

Consumer protections shrinking

With the government protections for consumers being slashed and repealed under this administration, it's important to understand that being proactive about one's finances is even more important than ever these days.

Although nobody wants to say ""the 'B' word,"" sometimes consumers must take the bull by its horns and face the facts. A Kentucky bankruptcy attorney can help you determine whether filing a Chapter 7 or Chapter 13 bankruptcy would be better for your overall financial picture.

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