Banks long have been a popular target for class-action lawsuits in the U.S. and frequently were forced to pay billions to settle litigation. The U.S. Senate now has decided to end this practice.
U.S. customers won’t be able to file class-action lawsuits against banking institutes anymore. The U.S. Senate voted to repeal the rule Tuesday, with Vice President Mike Pence casting the decisive vote to break a 50-50 tie, according to media reports in the U.S.
The banking lobby reached a huge victory over consumer protection groups, namely the CFPB, the Consumer Financial Protection Bureau. Customers and banks now will have to resolve their disputes through arbitration, a system the administration says works well.
The decision by the government removes a big risk factor for Wall Street and the financial sector as a whole. Banks and credit card companies had to anticipate the risk that a verdict in a case involving millions of customers would go against them. They had long been opposed to this form of legal action they claim was mainly a way for lawyers to fill their pockets.
