Acting Comptroller of the Currency Keith Norieka said on Tuesday the Senate's action stopped a rule "that would have likely increased the cost of credit for hardworking Americans and made it more difficult for small community banks to resolve differences with their customers."
Meanwhile, major bank lobbying groups who sued last month to block the rule cheered the resolution's passage.
One of the groups, the U.S. Chamber of Commerce, said congress had reined in the "overgrown and unaccountable" CFPB, an independent agency created to protect individuals' finances that conservatives say consistently reaches beyond its authority in its rulemaking.
Critics of the rule had said class actions only benefit trial lawyers and arbitration generally wins larger settlement awards for customers. Supporters said forced arbitration harms customers by putting companies in control of the process and taking away the right to sue enshrined in the U.S. Constitution.
The CFPB created its rule after conducting a five-year study that found customers struggle to have banks open arbitration cases about their complaints, but that those few cases have led to slightly higher individual awards than class actions.
"The Senate today prevented a cash grab that would have transferred wealth from consumers to the pockets of wealthy attorneys," said Ted Frank, director of the center for class-action fairness at the free-market group Competitive Enterprise Institute.
Ohio Senator Sherrod Brown, the most senior Democrat on the Banking Committee, meanwhile, said Tuesday's vote "will make the rich richer, and the powerful more powerful."
This article was provided by Reuters.