ANNAPOLIS, Maryland – A Maryland fiscal watchdog group, in its first meeting Thursday, said the state is bracing for the effects of federal financial deregulation, two days after the U.S. Senate voted to repeal a rule that would have made it easier for consumers to bring class-action lawsuits against financial institutions.
Maryland elected officials, industry and nonprofit experts with national and state perspectives on financial issues, both from the consumer and banking industries, chimed in on recent deregulations brought by the Trump administration.
The Maryland Financial Consumer Protection Commission was formed in June to assess the impact of changing federal financial regulations on Maryland institutions and consumers, and is similar to the Consumer Financial Protection Bureau, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2011.
“There is a campaign to roll back financial protections passed by the Obama administration,” Delegate William Frick, D-Montgomery, a commission member, said Thursday.
U.S. Senate Republicans relied on Vice President Mike Pence’s tie-breaking vote late Tuesday night to repeal a rule introduced by the federal Consumer Financial Protection Bureau that restricts banks and credit card companies from requiring their customers to agree to mandatory arbitration on their customers, following scandals at Wells Fargo and Equifax earlier this year.
Mandatory arbitration is often buried in customer agreements, and can prevent consumers from bringing a financial institution to court in a class-action lawsuit, something that can “allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up,” said Consumer Financial Protection Bureau director Richard Cordray in a July statement.
“These class-action lawsuits hold them (financial institutions) accountable by impacting their pocketbooks and bottom lines,” said Marceline White, the executive director of the Maryland Consumer Rights Coalition, at the commission’s first meeting.
Supporters of the repeal said arbitration is better for both financial institutions and consumers, as class-action lawsuits can result in costs that companies may pass off to customers.
The federal resolution now moves to President Donald Trump, who is expected to sign it, as his administration released a report earlier this week saying the Consumer Financial Protection Bureau failed to account for all the costs of arbitration rule.
“I’m sure he will, no doubt,” said White.