The Consumer Financial Protection Bureau (CFPB), created in the wake of the 2008 financial crisis, is typically portrayed as a federal agency that protects the little guy from powerful big banks. But reality looks much different. Read the full article…
Comments from Cary Flitter:
The financial crisis of 2008 brought on a recession and drove the U.S. economy to the brink of collapse. Much of this was caused by the repeal, over a period of years, of laws and regulations governing Wall Street and the spread of Forced Arbitration. Consumers and the public can take a step to rein in Wall Street excesses through Class Action Lawsuits.
In a class action, one consumer can sue on behalf of a larger group of consumers who were harmed in the same way. This allows them to hire top lawyers at no cost, and to spread the expense. Banks and other lenders never liked class action lawsuits because they can require banks to refund millions over a large group of consumers. They would rather each individual consumer be forced to try to find a lawyer and sue for a refund of say, $50.
For over fifteen years, banks have been abusing the Arbitration law by inserting an arbitration provision into many, or most, loan agreements, credit card applications, and all manners of consumer contracts. (Arbitration clauses almost always ban class action suits.)
A 2010 financial reform law permitted the Consumer Financial Protection Bureau to study – and if warranted, to ban – forced arbitration in certain consumer contracts. The CFPB study revealed what most had thought: banks and other lenders use Arbitration to get immunity from class action suits. And Wall Street isn’t at all happy that their party is coming to an end soon.
Forbes and other Wall Street publications can pick on the class action lawyers, but these specialized consumer attorneys take a great risk, usually over many years, to achieve justice, and often refunds, for large groups of consumers that would never occur otherwise. So, applause please for the CFPB and its Director Richard Cordray for standing up to Wall Street and, hopefully soon, restoring your legal right to go to court as a group to enforce your rights as a consumer.