WHAT’S IN YOUR WALLET?

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law. This Act was in response to the financial crisis caused by decades of wage stagnation, rising household expenses, the ease of obtaining credit, and the rapid growth of irresponsible lending practices. The Act established the Consumer Financial Protection Board (CFPB).

It’s important to explain what the CFPB is and what it has done for the average consumer. Rather than focusing on banking policy, the CFPB was created to focus strictly on consumers; to protect families from unfair, deceptive, and abusive financial practices. This includes banks, credit unions, securities firms, payday lenders, mortgagers, debt collectors, and foreclosure relief services.  The CFPB was given the authority to conduct federal financial investigations and did so in conjunction with the FDIC and the Department of Justice. At that time, there was widespread Republican effort to make this Act and the CFPB go away. The following lists some of the accomplishments of the CFPB for consumers: (1) they established that mortgage lenders could no long push you into a high-priced loan (thereby making the lender more money); (2) they, ordered refunds to people who got scammed (American Express was forced to pay back consumers $85M for misleading and discriminatory offers and excessive late fees and JP Morgan Chase was forced to pay back consumers $309 million for charging them for identity theft and fraud monitoring services they didn’t request); (3) they scrutinized student loan lenders who previously had been accused of charging students unfair penalty fees and making it difficult to negotiate an affordable repayment plan; (4) they protected military members from a US bank who failed to disclose fees associated with a military auto loan program. Dealer’s Financial Services paid back those military members $14 million. And that doesn’t include the CFPB’s other duties such as providing financial counseling, having an “other than lender sanctioned appraiser” on high cost mortgages, or the establishment of a division to handle consumer complaints.

The Dodd-Frank law also established the Volcker Rule. The simplest way to explain this Rule is that it prohibits banks from trading for their own profit with their customer’s money. This was another banking practice identified as leading to the financial crisis through risky trading.  It’s simply using our money, in essence, for their gain.

Having explained the Volcker Rule and CFPB’s role in protecting consumers from abusive banking practices will help you understand their involvement in issuing a ban on financial companies blocking consumers from participating in class action lawsuits. Did you know that many credit card companies and bank accounts have arbitration clauses in their contracts that prevent consumers from joining or filing class action lawsuits? Remember when Wells Fargo made the news by opening millions of fake accounts with customers’ money, charging them fees, without the customer’s authorization? Wells Fargo had mandatory arbitration clauses/agreements in every one of their contracts. Neither the consumers nor their employees could file a class action lawsuit against them. It was the CFPB that fined Wells Fargo and forced them to reimburse their customers.  Arbitration clauses force consumers to give up, go it alone, or settle for less in arbitration. The clauses allow the lenders to avoid the court system, avoid having to repay the refunds, and quickly move on to the next consumer.

The difference in refund amounts awarded through class action lawsuits versus arbitration is staggering. As required by Dodd-Frank, the CFPB’s 2015 study revealed that credit card issuers representing more than half of all credit card debt and banks representing 44% of insured deposits use mandatory arbitration clauses. The study further revealed that group lawsuits succeed in “bringing hundreds of millions of dollars in relief to millions of consumers each year”. On the other hand, arbitration cases awarded a combined total of $360,000 to 78 consumers. This study led to the CFPB issuing the final “Rule to Ban Companies from Using Arbitration Clauses to Deny Groups of People Their Day in Court” on July 10, 2017.

But wait; let’s back up just a little here. In March of 2017, Rep. Shimkus voted for The Fairness in Class Action Litigation Act of 2017 (HR985). Luckily, this bill has not yet passed in the Senate. Rather than go into the details of what this Act does, I’ll let an expert explain.  Linda Lipsen, CEO of the American Association for Justice, a national plaintiff lawyer association, stated “HR 985 rolls back a century of legal progress that guarantees the rights of individual Americans and pushes our country back into the dark ages when corporations were free to bet against the U.S. economy, sell dangerous products, and discriminate against their workers in the process. We are astonished that backers of HR985 would rig the system against their constituents to immunize powerful corporate wrongdoers from being publicly held accountable in U.S. courts”. That’s a pretty scathing statement. Likewise, this bill has been opposed by numerous civil rights organizations, nearly every major consumer advocate group, numerous academics, and the American Bar Association. In fact, the American Bar Association was stunned by this action. “There simply is no proof that problems created by frivolous lawsuits have increased since 1993 or that the current Rule is ineffective in deterring frivolous filings. Most importantly, there is no evidence that the proposed changes would encourage new litigation over sanction motions, thereby increasing, not reducing, court costs and delays. This is a costly and completely avoidable outcome.” Interestingly, had this law been in effect last year, students of Trump University would not have been able to sue and recover their tuition.

On June 8, 2017, Representative Shimkus also voted for The Financial Choice Act of 2017. This Act totally gutted Dodd-Frank and the many reforms enacted after the financial crisis. It repeals the Volcker Rule and makes the CFPB virtually powerless over financial institutions by limiting their authority to take actions against them for abusive practices. Again, Rep. Shimkus’ vote is not in the best interest of his constituents and favors big money. This Act solely benefits banks and lending institutions. While this Act has not yet become law (still in the Senate) Rep. Shimkus has once again shown his intent to support big money over people. But wait; there’s more.

On July 25, 2017, just 10 days after the CFPB instituted their ban on arbitration clauses, Representative Shimkus voted for HJ Res 111 which nullifies the CFPB Rule to Ban Arbitration Clauses.

Why would Shimkus vote for these bills/resolutions which negatively affect people across the country? Why does he consistently vote big money over his constituents who put him in Washington to represent their best interests? The answer is simple: the financial institutions are in his wallet.

A review of Rep. Shimkus’ PAC and industry contributions with relation to his vote on removing these consumer protections and denying your day in court is telling. He has received $1,460,375 from financial PACs over his career. Of course he would want them to continue making exorbitant profits.  So the “What’s in your wallet?” question now turns into “Who’s in your wallet?”

The answer is simple: Shimkus. We need a Representative who works for the people, not the financial PACs big money. We need a Representative who is not bought. We need Carl Spoerer.

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