By Sherrod Brown
A number of Wall Street banks, car title lenders, big corporations, and payday loan sharks have two things in common: They have a record of ripping off consumers, and they have armies of expensive lawyers and lobbyists in Washington, in Columbus, and in State capitals all over this country who protect them from facing the consequences.
That is why it is so important that ordinary American consumers have their own cop on the beat--the Consumer Financial Protection Bureau (CFPB). The recent abuses by Wells Fargo are the latest proof of how necessary the Consumer Financial Protection Bureau’s work is.
Less than a year ago, we learned that Wells Fargo secretly opened millions of phony bank and credit card accounts without customers’ permission. The CEO of Wells Fargo had to resign as a result. This was an outrageous abuse of American consumers. The sheer size and scope of this scam are breathtaking. In total, Wells Fargo may have opened as many as 3.5 million unauthorized accounts – meaning, it opened these accounts without the accountholders even necessarily knowing that they did it, without permission – costing customers some $2.5 million in fees.
The abuses are bad enough. To make matters worse, Wells Fargo tried to keep this scandal hidden from the public, and it used something called the “forced arbitration clauses,” which are buried in the fine print of customers’ contracts, to deny them their day in court. There is hardly anybody in this country who has not confronted small print in a contract when signing that contract, especially with a financial institution. Customers first sued over these fake accounts back in 2013, but Wells Fargo then forced them into secret arbitration proceedings, keeping this scam under wraps and blocking consumers from obtaining any relief.
Last year, the CFPB and other watchdogs blew the lid off of this scandal. Customers sued once again, and, once again, the bank tried to block them from getting relief in court. This time, because of the CFPB and others who shone a light on the scandal and on all of the bad press that went with it, Wells Fargo relented. So, after two congressional hearings and a flood of bad headlines, Wells Fargo is cutting a deal in its phony account scandal. Yet now we have learned that this is not the only scam that one of America’s largest banks has pulled.
Just last month, we learned that the bank forced unwanted insurance on 800,000 auto loan borrowers, potentially pushing tens of thousands into default and repossession, and it is still using these forced arbitration clauses in its contracts in order to cheat future consumers, including in the contracts in this auto loan scam.
The only thing more outrageous than the fact that Wells Fargo continues to cheat its customers is the fact that a lot of Members of are trying to make it even harder for those customers to seek justice in their overturning the arbitration rule. They think that forced arbitration and the fine print, which most people do not read and most people do not understand if they do read it, is legitimate. No wonder so many hard-working Americans believe that the system is rigged against them in Wall Street’s favor.
These scams have caused real damage for hundreds of thousands of Americans as 275,000 Wells Fargo customers have been forced into delinquency by being charged for unnecessary insurance, and 20,000 vehicles have been unfairly repossessed because of this bank’s behavior.
Wells Fargo is not alone. Santander has used forced arbitration clauses against service members. It is a Spanish company that does business in the United States and uses forced arbitration clauses against American service members – again, for illegal car repossessions. In 2015, Santander used forced arbitration to block an Army National Guard sergeant from seeking justice after the bank illegally repossessed his car while he was serving our country overseas.
Yet, with all of this happening, some members of Congress, again, are doing the bidding of Wall Street lobbyists. The CFPB just finalized a new rule that limits the arbitration clauses that allow big corporations to get away with ripping off service members, students, and other hard-working Americans, but the ink is barely dry on this new consumer protection, and big banks and their allies in Congress--and God knows they have a lot of allies in Congress and allies in the administration – are already trying to overturn this rule.
Last month, Republicans in the House voted to overturn this rule that ensures that all Americans who have been ripped off by banks or payday lenders are able to have their day in court. Despite promising during his campaign to look out for the little guy, President Trump’s Acting Comptroller of the Currency, who is also – alas – a former Wells Fargo lawyer, is trying to get the CFPB to back off that rule.
It is unconscionable that Washington politicians are undermining the rights of consumers to have their day in court when they are cheated by banks and payday lenders. Folks in Washington who want to dismantle the CFPB and gut its rules seem to have collective amnesia about the devastation that Wall Street greed has wreaked on communities across the country, but most Americans do not have that luxury. They are still recovering.
I have seen what has happened with Wall Street greed and the kind of collective amnesia in this body whenever Wall Street wants something, whenever the payday lenders want something, whenever the big banks want something, and Congress rushes in to help them and to respond to their lobbyists and their lawyers who lobby this body. It is pretty simple. Gutting the CFPB’s arbitration rule means banks get away with cheating their customers.
So I ask senators to ask themselves: Whose side are you on? Are you on the side of the payday lenders and Wells Fargo when they defraud the public or are you on the side of service men and women and the side of people who have lost their cars, which were repossessed because of the unilateral actions by this bank?
Those are the same big banks that preyed on working families before the crisis wrecked the economy and handed taxpayers the bill. Is that whose side we are on or are we on the side of consumers?
Sherrod Brown is the ranking member on the U.S. Senate Committee on Banking, Housing, & Urban Affairs. His remarks were made on the Senate floor.