Victory! President signs Wall St. Reform Bill Into Law

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, July 21st, 2010

Unless your business model depends on cutting corners or bilking your customers, you have nothing to fear from this reform. – President Obama

President Obama signed into law a historic bill to overhaul the rules for banks and Wall Street on the heels of the financial crisis that triggered the worst recession since the Great Depression.

One of the most important provisions of the landmark law is the creation of a new Consumer Financial Protection Bureau (CFPB) to protect borrowers from abuses in mortgages, credit cards and other types of loans.

In addition to bringing important and needed oversight to mortgages and other consumer loans, there are four important areas for the new CFPB to target:

Accurate credit reports: Consumers lose economic opportunities when credit reporting files are wrong. The new bureau should bring enforcement actions against big credit reporting agencies that don’t follow the legal standard for correcting mistakes in a credit report, and it could decide that it is an unfair practice to give consumers a different copy of the credit file than the one provided to potential creditors.

Debt collection practices and debt buying: The Federal Trade Commission has called debt collection litigation a “broken system” and reported that debt collectors misuse the courts to collect outdated debt. The CFPB could define debt collection practices which are unfair if the debt started with a financial product or service, such as a credit card.

Payday lending: These lenders trap consumers in a cycle of debt, charging high fees every two weeks to replace one payday loan with another one. The bureau should end the practice of taking a check or access to the bank account as the basis for making a loan – this is like promising your next paycheck before you even receive it.

“Ways to pay”:
Consumers shouldn’t face a loss of consumer protections because they pay using a prepaid debit card or a mobile phone, rather than a traditional debit card or a credit card. The bureau could apply existing consumer protections to these consumers.

What is on your list? Tell us in the comments.

Click here for the entire text of the Wall St. Reform Bill.

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