What Is In The Wall St. Reform Bill For You

Campaigns

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

By Consumers Union on Friday, July 16th, 2010

The Senate’s 60-39 vote passing a landmark bill to overhaul the rules for banks and Wall Street shows the power that consumers can have over even the most powerful and well-funded lobby groups in the country. The bill, which passed the House on June 30, is now headed to the White House, where President Obama is expected to sign it into law next week.

Thanks to an incredible amount of consumer grassroots activism combined with Consumers Union and huge coalition of advocacy groups passed a bill that is a “game-changer”, a much-needed reform package to prevent the abuses and irresponsible risks taken by financial institutions that helped spark the economic crisis.

The key provision of the bill for consumers is the creation of the Consumer Financial Protection Bureau, which will oversee financial products and services such as mortgages, credit cards, payday loans, check cashing, and private student loans, whether those products are provided by a bank or another type of financial service provider.

The next steps are important to make sure that consumers get the benefit we all deserve from the new Consumer Financial Protection Bureau and from the Wall Street reform bill. For example:

  • The President will have to appoint the director of the CFPB.
  • The President will be choosing a new head of the Office of Comptroller of the Currency, the agency that still oversees national banks for non-consumer issues, such as whether they are taking too many risks.
  • The Federal Reserve Board and other existing banking agencies have to start regulations on key economic issues such as how much strength to require for banks and systemically important non-banks so that they don’t bring down the financial system.
  • The banking regulators will have to define which mortgages are so safe that they won’t invoke a requirement that the securitizer keep some of the risk of those mortgages.
  • When the CFPB gets up and running, it will be able to define particular practices as deceptive, abusive, or unfair, and to say that those practices have to stop.
  • Your state legislature can consider passing new consumer protections that will finally apply to subsidiaries and affiliates of national banks, and in some cases to the national banks themselves.

In the coming weeks and months we will ask for your help to make sure that the new regulations are strong, and that the banking industry doesn’t succeed in using the implementation process to water down any of the hard-fought gains in the reform bill.

Although no bill is ever perfect, and Consumers Union will continue to fight to improve the financial marketplace, the historic changes you’ve won through your efforts to get this bill passed will have a lasting and positive effect. Some key provisions are:
In the coming weeks and months we will ask for your help to make sure that the new regulations are strong, and that the banking industry doesn’t succeed in using the implementation process to water down any of the hard-fought gains in the reform bill.

Although no bill is ever perfect, and Consumers Union will continue to fight to improve the financial marketplace, the historic changes you’ve won through your efforts to get this bill passed will have a lasting and positive effect. Some key provisions are:

New Consumer Financial Protection Bureau: This watchdog will make the rules for financial products we all deal with – mortgages, credit cards, checking accounts, payday loans and more. For the first time consumers will have a federal agency to look out for us, with the power to make and enforce rules to prevent scams and rip-offs. States can go even farther in protecting their residents and in enforcing the law.

Improved auto-dealer regulation: Car dealers got themselves exempted from the new consumer watchdog despite consumers’ best efforts. But, the bill gives the Federal Trade Commission improved authority to stop unfair practices by car dealers in auto financing. We’ll keep working to make sure consumers get a fair deal if they finance their cars through a dealer.

No taxpayer bailouts: Better oversight and strong capital requirements should prevent big banks and non-banks from getting into trouble, and the new law also allows regulators to require these big institutions to have a “funeral plan” for what happens if they fail so it can be done without harming others. A new method for unwinding firms that are important to the financial system has been created, with a fee on banks to pay for their own dissolution, rather than calling on the taxpayers to pay for future bailouts.

Limits on risky bank conduct: The new law limits the size of investments that banks can make in hedge funds or private-equity funds. Give lenders or securitizers a stake in making sound mortgage loans. Those banks that package mortgage loans would have to keep 5% of the risk – keeping their skin in the game unless those mortgages meet special standards for safety.

Better mortgage regulation: The new law requires that lenders determine that borrowers can afford the mortgages they make, and restricts penalties for paying off the mortgages early.

More insurance of our deposits: The new law makes permanent the previously temporary increase in the level of federal deposit insurance for your money on deposit at banks, thrifts and credit unions to $250,000 per customer.

To learn more click here. For more good analysis check out “Will This Stop the Next Financial Armageddon?”

Leave a Reply

Your email address will not be published. Required fields are marked *