The four Mainers who represent the state in Congress split along party lines to repeal a proposed regulation that sought to protect the ability of consumers to join class action lawsuits against financial institutions.
U.S. Sen. Susan Collins, a Republican, joined a 51-50 majority late Tuesday that blocked a proposal by the Consumer Financial Protection Bureau that called for an end to most mandatory arbitration clauses by 2019.
U.S. Sen. Susan Collins (AP file photo)
Collins called it “regulatory overreach that arose from a misguided attempt to help consumers.”
Though consumer groups hailed the regulation — and banks strongly opposed it — Collins said that arbitration “is often better for consumers” because it is “simpler, cheaper and faster” and often leads to bigger payouts.
Maine’s other senator, independent Angus King, voted with the Democrats against repealing the proposal rule. Two GOP lawmakers, both of them trial lawyers, sided with the Democrats, forcing Vice President Mike Pence to cast the deciding vote.
The consumer agency endorsed the proposed rule, but before it could take effect, Congress had 60 days to block it. The House voted last summer to kill the regulation — with U.S. Rep. Bruce Poliquin, a Maine Republican, favoring its demise and Maine Democrat Chellie Pingree supporting the rule.
Consumer advocates had hoped to sway Collins to join the opposition — as she has several other controversial showdowns — but she opted to side with the banks instead.
In a statement released Wednesday, Thomas Cox of Yarmouth, a counsel at the National Consumer Law Center, said it was “deeply disappointing to see Sen. Collins vote against the best interests of Mainers” and accept “the false claims of the Wall Street financial industry who opposed the consumer-focused rule.”
Collins said, though, that trial lawyers would have been its biggest beneficiary, not consumers.
“Trial lawyers were expected to reap an additional $330 million as a result of this rule, while plaintiffs would not have received a penny in the vast majority of those cases,” she said in a prepared statement.
“The cost of these often-inefficient class actions would likely have been borne by consumers in the form of increased fees and interest rates,” she said.
Collins pointed out that in most class action cases, consumers wind up with nothing or only a pittance when the suits are settled.
“It is no wonder that the Treasury Department found that the CFPB rule failed to show that it would serve public and consumer interests,” she said.
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