St. John's University Law Faculty Blog

Professor Jeff Sovern’s op-ed, Financial Choice Act Prioritizes Banks Over Consumers, appeared in Morning Consult on July 25. Sovern wrote:

Remember how back in 2008, the Bush administration shepherded a $700 billion bank

bailout through Congress? Well, the House of Representatives voted last month to rescue banks yet again. And if its bill, the Financial Choice Act, becomes law, ordinary Americans may pay a bigger price than they did for the 2008 bailout.

* * *

Supporters of the bill, claiming that every day the country loses another community bank, argue that banks are in trouble. The culprit, in their eyes, is the Dodd-Frank Act, passed in 2010 to prevent another financial crisis, which they argue imposes excessive regulation on banks.

Opponents of the bill note that, as one recent headline had it, American bank profits are higher than ever, and community bank profits rose by more than 10 percent in the first quarter of this year. Despite the consolidation of community banks — a trend that began years before Dodd-Frank, suggesting other causes for the consolidation — the country still has almost 6,000 FDIC-insured banks, and a similar number of credit unions.

In addition, a July 21 report by the Democratic Staff of the House of Representatives Committee on Financial Services titled The Consumer Financial Protection Bureau in Perspective cited Sovern’s July 13 article in Fortune, “How This New Rule Prevents Your Bank From Ripping You Off.” The same Fortune article was also quoted in a Politico newsletter on July 20.

Sovern was also quoted in a Center for Public Integrity story, headlined “Who is killing the CFPB’s arbitration rule?”:

“We know what happens with a class action: Wells Fargo agrees to give $140 million. We also know what would happen in arbitration: Consumers who only have small claims wouldn’t get anything,” said Jeff Sovern, a law professor at St. John’s University.”

Finally, a story at Creditcards.com titled “Why I opted out of credit card arbitration – and you should too” stated:

For that reason, opponents of arbitration call the opt-out clause an empty gesture. “I think it’s basically a trick to create the illusion of choice,” said Jeff Sovern, a professor at St. John’s University School of Law in New York, who has studied arbitration clauses in consumer contracts. Most consumers don’t understand the arbitration clause, or even know it is buried in the fine print of their contract, he said. A minuscule number of customers take advantage of it. “They don’t make it easy to opt out,” he said.

Posted on July 31, 2017 at 2:07 pm in Uncategorized   |  RSS feed |   Reply   |   Trackback URL