On Thursday US Senate approved the broadest overhaul of financial rules for years. It is expected that President Obama will sign it into law next week.
The more than 2,300 page bill comprises a range of different measures. These include a new system to monitor risks to the financial system, new powers for the US government to contain the damage from failing firms if they threaten the broader economy, more control of the derivatives market to increase accountability and transparency, limits to proprietary trading, and more consumer protections.
The new Consumer Financial Protection Bureau - housed in the Federal Reserve - will oversee financial products and services such as mortgages, credit cards, payday loans, check cashing and private student loans in the interest of consumers.
Furthermore, the bill entails other measures to enhance consumer protection, such as:
- the fees that banks charge retailers when consumer use debit cards are cracked down.
- mortgage lenders are required to determine that borrowers have the ability to repay their loans.
- prepayment penalties for mortgages are limited or eliminated.
- all consumers are entitled to free credit scores when they are denied credit or charged a higher price for credit because of information in their credit report.
US consumer organizations hail the passing of the bill. Consumers Union calls the bill a “game changer”. The coalition of US consumer organizations, Americans for Financial Reform, sees the passage of this legislation as a victory “for Main Street over Wall Street”.
For further information, see: http://www.reuters.com/article/idUSTRE66E0MD20100715, http://www.consumersunion.org/pub/core_financial_services/016644.html and http://ourfinancialsecurity.org/2010/07/afr-victory-for-main-street/
Source: Reuters, Consumers Union und Americans for Financial Reform