Yesterday, the Consumer Financial Protection Bureau (CFPB) introduced a ballsy regulatory move in the form of a new proposed rule that will hopefully “unravel a set of audacious legal maneuvers by corporate America that has prevented customers from using the court system to challenge potentially deceitful banking practices.” Financial firms have been using mandatory arbitration clauses in the “fine print” of contracts to shield them against their customers’ ability to pursue class action law suits, and this new rule demonstrates that the administration aims to put a complete end to the practice.
“It’s going to spell the end of arbitration,” said Alan S. Kaplinsky, a lawyer with the firm Ballard Spahr in Philadelphia, who pioneered the use of arbitration clauses to thwart class-action lawsuits and thus opposes the proposed rule. “It will lead to a huge upsurge in litigation and take away a benefit to consumers.”
The practice relies on customers not having the same degree of information (that’s what the “small print” is for) as the corporations they’re entering into a contractual agreement with, and this kind of information disparity is a systematic problem that we’ve been tackling at the Washington Monthly in a series of posts, including a trio by Lina Khan, and this one from Gilad Edelman. In fact, the “asymmetry of information” problem has been a theme running through our coverage in recent years, including our Big Lobotomy analysis of Congress and a group of articles on government written by Lee Drutman. In the next issue of our magazine, we’ll have another piece that touches on this issue written by Anne Kim. It’s on new regulations proposed by the CFPB on payday lenders, a predatory industry that offers desperate people a raw deal in exchange for quick cash.
It’s kind of fascinating to see how information asymmetry is at the heart of so many pressing issues. I thought the internet was supposed to fix this.
Did you see my link on non-compete clauses in employee contracts? Same asymmetry, as many states will not even enforce them. Another way to hold down wages. Govt finally gets around to noticing…
https://www.whitehouse.gov/sites/default/files/non-competes_report_final2.pdf
The internet lets us know where information asymmettry exists now–if we read the right blogs or news sites. The overwhelming gush of information on the internet works to make this information invisible to the average person.
That is a huge regulation that likely will turn out lots of money for politicians who promise to defeat it.
But if it holds, it strengthens the force of the CFPB to undertake other tough regulations.
Who will tell the people because the most widely absorbed media won’t.
Speaking of information, this just in:
Maine Democratic Convention Abolishes Superdelegates
http://usuncut.com/politics/maine-democratic-party-just-got-rid-superdelegate-system/
Under the new rules, super delegates will technically still exist (only the national convention can abolish them), but they will be required to vote in proportion to the popular vote, the same as any other delegate.
The movement to end super delegates is sweeping the country because people are tired of seeing their votes overturned by party insiders.
In Wyoming, Bernie won 56-44, but lost the delegates 11-7.
In Michigan, Bernie won 50-48, but lost the delegates 74-67.
Missouri was a virtual tie, with Bernie losing by just 0.2%. But because of super delegates, Bernie lost the delegates by a whopping 49-35.
And nationally, super delegates are threatening to shut down the election before huge states like California even get to vote–despite the fact that Bernie is just 292 delegates behind with 1,083 delegates still available.
This is unacceptable in a democracy, and today’s vote is the first big step towards ending the undemocratic super delegate system for good.
No. SATSQ.
This isn’t actually information asymmetry, it’s power asymmetry.
If it was information asymmetry, then the agreement could be modified. It can’t. Maybe you want to use another lender instead. Think you will get different legal terms about arbitration??
Ha ha, funny you.
Firm A may have a higher interest rate, Firm B may have a lower interest rate. That financial information disparity is easily dealt with on the Web. But when you go to sign either contract, the legal options other than arbitration are – none.
Yeah, that’s not really the asymmetry, except in power, as you say.
The asymmetry is what leads people to want to sue in the first place. That’s where the information gap lies.
You may know this, but in the way that the Ledbetter Law was drafted in response to a horrible SCOTUS decision, this CPFB regulation was in partial response to another horrible SCOTUS decision:
http://www.bloomberglaw.com/public/desktop/document/Am_Express_Co_v_Italian_Colors_Rest_No_12133_201
3_BL_163177_US_Ju?1462592442
I hope the reg survives judicial review.
Also, too, looking forward to seeing the next Frog Ponder lecture us about how terrible Dodd/Frank is. License to steal, it is.
The Intercept – Atlanta Mayor’s Column Ripping Sanders Drafted by Lobbyist
reference — Correct the Record = David Brock.
Also see Max Blumenthal at AlterNet — How Opponents of UK Labour Leader Corbyn Advanced a Political Coup with Antisemitism Smears. A good review of the how TPBT “catapult the propaganda.”
Yeah. I saw the Corbyn story.
Chilling and the echoes on this side of the pond are loud.
thanks for that alternet link, excellent story.
Slightly OT, but only slightly:
http://usuncut.com/politics/maine-democratic-party-just-got-rid-superdelegate-system/
Under the new rules, super delegates will technically still exist (only the national convention can abolish them), but they will be required to vote in proportion to the popular vote, the same as any other delegate.
The movement to end super delegates is sweeping the country because people are tired of seeing their votes overturned by party insiders.
In Wyoming, Bernie won 56-44, but lost the delegates 11-7.
In Michigan, Bernie won 50-48, but lost the delegates 74-67.
Missouri was a virtual tie, with Bernie losing by just 0.2%. But because of super delegates, Bernie lost the delegates by a whopping 49-35.
And nationally, super delegates are threatening to shut down the election before huge states like California even get to vote–despite the fact that Bernie is just 292 delegates behind with 1,083 delegates still available.
This is unacceptable in a democracy, and today’s vote is the first big step towards ending the undemocratic super delegate system for good.
The Party Presidential nomination has never been overturned by Party insiders. How can people get sick of something which has never happened?
The situation was similar in 2008. Clinton entered the nomination with a substantial advantage in the polls, and accordingly started with a supermajority of superdelegate support. When Obama began winning primaries and caucuses, the superdelegates began flipping. That same path was available to anyone challenging Clinton this cycle, but the strong majority of voters supported Hillary, so the superdelegates haven’t flipped. But if Sanders had won with the voters, history shows the superdelegates would have flipped.
Organizing for the changes you seek in the superdelegate rules is fine. Just make yourself aware that if your proposed changes had been in place this year, Clinton would still be on her way to the nomination. Hillary was much closer to Obama in the pledged delegate count in 2008 than Sanders is to Clinton this year.
If you believe there is a problem, that problem is the voters, not the superdelegates or the Party establishment. Please don’t misdiagnose the problem.
But I just gave three examples, Wyoming, Michigan, Missouri, where Bernie won the states, or virtually tied, but got fewer delegates — due to the super delegates Hillary already owned before the vote. That’s the point, and I notice the media has ignored that it, at least until the Maine resolution.
Let me state it in direct response to your examples: if Hillary were losing the popular vote and pledged delegate count, most of the superdelegates in Wyoming, Michigan would have moved to Bernie by now. But Hillary is winning the popular and pledged delegate counts, so the superdelegates in these States are sticking with her.
I mean, just think it through: if superdelegates in the States which have already held their primaries merely announced that they planned to vote for the candidate who won their State and/or District, Clinton’s total lead would be bigger than the lead she holds with the pledged delegates in isolation, because one leads to the other.
Bernie’s problem is with the electorate, not the superdelegates.
I meant to add Missouri to Wyoming and Michigan in my first response here.
Just to create even further clarity: my understanding is that superdelegates, unlike pledged delegates, are free to change their vote at any time before the moment they must cast their vote on the floor of the Party Convention.
Pt. II. Squared. Cubed, even.
Coumadin: ‘The most dangerous drug in America’
And not “perhaps,” because it earned millions and millions of dollars for Bristol-Myers-Squibb.
Big Med, Big Pharma and Big Insurance know damned well what they are doing. They pay so-called experts to falsify tests and give false testimony, just as did the tobacco industry in its heyday. Then…again as did Big Tobacco…they use their billions of dollars worth of advertising to discourage Big media from publicizing what does manage to get out. Information asymmetry like a motherfucker!!! Why Coumadin, why now? because they have other, equally dangerous blood thinners that they want to hype. Bet on it.
Note the date above.
2007!!! It’s taken 10 years to even begin to isolate one of the many drugs that are routinely killing people in the U.S.
Criminal.
Read on:
And 10 years from now these drugs will be phased out with a negative media campaign so that the .01% thieves and murderers who run these companies can continue to make obscene profits off of the ills and deaths of others.
The same game is being played by Big Oil regarding global warming, by Bg Agriculture and Biig Food regarding the utter poison that is being fed…especially to the poor…through pre-packaged food and fast food charnel houses.
You want some ore?
Sure.
The federal government…especially the armed forces, the the various intelligence interests and the so-called “State Department”…”State of War department” would be much more accurate…are absolutely dependent on the asymmetry of information. If the public actually knew:
1-What is going on
2: For what real reasons
and
3-The actual monetary cost of the permanent war that has been fought since WW II officially ended
There would be riots in the streets.
However, Congress and the White House collude with those interests in hiding the truths of the matter.
Asymmetry of information.
An idea whose time has run out.
Bet on that as well.
Sooner rather than later. The internet is now an open door that cannot be effectively shut because of monetary reasons. Almost the entire consumer economy is now internet-based. Closing it in any way whatsoever would be the last straw for an already badly injured economy.
Tick-tock. The clock is running out on these thieves. More and more people are seeing through their game.
A good time to be alive, I think.
A very good time.
AG
Once my doctor wanted me to take it. I told her I wasn’t going to ingest rat poison.
BTW, I think the super rats are immune. But they are not immune to coyotes that have found a gourmet feast on Chicago’s South Side.
Go CFPB! Honestly I’m fine with the lawyers getting the bulk of the lawsuit money because the will prevent me from getting cheated in the first place.
Of course nobody goes to arbitration, because everybody know the arbitration is profoundly stacked against them. Why waste time, effort, and often money?
* Slow Clap *
I think it’s more an issue of unequal bargaining power than information asymmetry, but either way this could be a very significant development.