How The Financial Reform Bill Affects Your Everyday Life (PHOTOS)

NEW YORK (By Rachel Beck, AP) - The financial overhaul is about more than exotic derivatives and complex risk assessments. It will change how you interact with the financial system every day, from swiping your debit card at the store to applying for a mortgage.

That includes new rules governing how we bank, borrow and invest, plus the creation of a new regulator to make sure financial transactions like signing up for a credit card are safer and easier to understand.

The legislation does not go as far as some would have liked. Auto dealers, who make most car loans, won't face oversight by the new consumer bureau. Nor will banks with less than $10 billion in assets, even though they serve most communities in this country.

Here's a piece-by-piece guide to the new rules.

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CONSUMER PROTECTION

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A new Consumer Financial Protection Bureau, to be housed in the Federal Reserve but run independently, will have the power to write consumer protection rules for banks and other financial institutions, like mortgage lenders. It will also examine and enforce regulations already in place at mortgage lenders and banks that hold more than $10 billion in assets. The bureau will have the power to ban financial products that it considers unsafe. It could also outlaw anything that might be confusing to consumers, like the fine print on credit cards or mortgages. In theory, it could also block credit-card companies from charging especially high interest rates. The idea is to bring consumer regulation under one roof, rather than spreading it out among seven different agencies. "It's hard to be an expert on economics and consumer protection at the same time," says Jeffrey Sovern, a law professor at St. John's University and an expert on consumer law. Still, the new bureau will cover only half the bank branches in the nation because of the $10 billion asset requirement, according to data from the National Community Reinvestment Coalition, a Washington-based consumer group. It also may not be as independent as it seems. If federal banking regulators object to new consumer protection rules, they can appeal to a newly created council made up in part of their fellow banking regulators.

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A new Consumer Financial Protection Bureau, to be housed in the Federal Reserve but run independently, will have the power to write consumer protection rules for banks and other financial institutions, like mortgage lenders.

It will also examine and enforce regulations already in place at mortgage lenders and banks that hold more than $10 billion in assets.

The bureau will have the power to ban financial products that it considers unsafe. It could also outlaw anything that might be confusing to consumers, like the fine print on credit cards or mortgages.

In theory, it could also block credit-card companies from charging especially high interest rates. The idea is to bring consumer regulation under one roof, rather than spreading it out among seven different agencies.

"It's hard to be an expert on economics and consumer protection at the same time," says Jeffrey Sovern, a law professor at St. John's University and an expert on consumer law.

Still, the new bureau will cover only half the bank branches in the nation because of the $10 billion asset requirement, according to data from the National Community Reinvestment Coalition, a Washington-based consumer group.

It also may not be as independent as it seems. If federal banking regulators object to new consumer protection rules, they can appeal to a newly created council made up in part of their fellow banking regulators.

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Ways Financial Reform Will Affect Consumers

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Comments

[William McKibbin]

02:22 PM on 07/17/2010

The Main Street Depression is imploding Ameriia -- more at:

http://wjmc.blogspot.com/2010/07/main-street-depression-has-descended.html

I grieve for our nation...

[norkas]

07:41 AM on 06/28/2010

Please show me the massive investigation that took place when bank officers were forced to give loans to those they knew were not qualified.

Bank officers leaned on loan officers to make the loans even though they understood they would not be paid back.

All officers were under pressure to write any loan for a home that someone wanted and this may have been forced by the board of some of the banks.

Big business owns the justice system and it is getting much worse. We are truly going to have a major confrontation with Dems voters and Rep voters standing hand in hand fighting the fact that big business owns the JUSTICE SYSTEM and it will be getting worse.

This is so demented but true and when there is no justice for major billion dollar frauds other then a scolding the frauds continue.

We are on the way to another meltdown and a major loss of freedom we have always cherished because of the ownership of policies and the justice system by big business. They will now own the politicians because of the supreme court vote allowing business to give NO limit in contributions.

We will have unity with Republican and Democratic voters on these issues and if i were a politicians i would stand up now and shout down the power of big business on the Justice System

[worker beenumbed]

09:16 PM on 06/27/2010

The law also requires a borrower to have enough income to pay the mortgage after the interest resets upward.Barnanche failed to use the authority he had to do this in 2006.Now it is in the law---the last time I looked.

[vippy]

12:20 PM on 06/28/2010

I remember that was the law when I bought my house some 30 years ago. What had changed and why?

[CTtransplant]

06:16 PM on 06/27/2010

Reinstate Glass-Steagal...problem solved.

[GetTheFreakOuttaHere]

08:22 PM on 06/27/2010

Thank you!!

[filo]

09:00 PM on 06/27/2010

I wholeheartedly agree. It would appear that it is too obvious for our illustrious congress.

[uniquindividual]

05:54 PM on 06/27/2010

Again, Glass Steagal repealed and ONLY eight years later a global recession.
Remember electricity deregulaition?
How about Savings and Loans deregulation back in the 80s'

Those who think that ignorance and greed are a thing of the past are stupid.

Some things are too important to deregulate. Tinker OK.

[uniquindividual]

02:49 PM on 06/27/2010

This "Reform/Re-Regulation" is far from over I hope. What finacial institution can I move my money to that will use my money to help local businesses instead of speculating on stocks and/or derivatives?

It took FDR more than five years to get his program through. The last vestiges - Glass/Steagal - were shed at the end of the Clinton presidency. Eight years later, we had/have a global recession associated with out of control banking.

Those who can't or won't recall/respect history are doomed to repeat it.

[ThatsTheTheWayItIs]

03:08 PM on 06/27/2010

I mostly agree with what you say: re-regulation is "an ongoing process".

But as much as I am not a fan of deregulation, it's a mistake to compare today's economy to that in 1929. The economy is much more global today, more women workers than men, more automated, computers, the Internet ... Fans of deregulation may be at least somewhat correct, yesterday's banking may not work in today's world.

Those who naively apply history to the present are doomed to live in the past :-)

[binksmom85]

04:31 PM on 06/27/2010

pay no attention to the man behind the curtain secretofoz.org

[uniquindividual]

05:56 PM on 06/27/2010

Again, Glass Steagal repealed and ONLY eight years later a global recession.
Remember electricity deregulaition?
How about Savings and Loans deregulation back in the 80s'

Those who think that ignorance and greed are a thing of the past are stu.....

Some things are too important to deregulate. Tinker OK.

[vippy]

12:25 PM on 06/28/2010

LOL this whole financial reform bill (a joke) could have been writtten on one page by putting back in place the Glass-Stegall Act and the Commodities Futures Modernization Act of 2000! But no,
the problem that got us in trouble has not been addressed, the derivative issue has not been dealt with, the bonuses are back, and the oil prices are in the hand of speculators still. Nothing much has changed. Why we call all of these bills "reform" is insulting to our intelligence.

[Laughlines]

02:12 PM on 06/27/2010

It wouldn't be hard to pass a bill giving consumers more protection than we had before since we had NONE. The Republican's strategy is working perfectly. Take a bill ... any bill ... that Democrats are working to pass that will make life better for the average American ... Health Care Reform ... Finance Reform ... doesn't matter ... pout, stomp your feet, threaten to take your ball and go home ... get them to water it down to point that it's just a shadow of its former self ... then still not vote for it.

Wise up, Dems!! They are playing you for a bunch of fools. Stick to your guns and maybe you can make a big difference in the lives of Americans. You are never going to win the hearts of the Republican voters by compromising on these bills but what you will do is alienate the people who did vote for you.

[GetTheFreakOuttaHere]

08:26 PM on 06/27/2010

Yep, that about sums it up. [sighhhhhh!]

[Mario D]

01:59 PM on 06/27/2010

THIS BILL WILL SCREW THE CONSUMER:

Retailers tell consumers that this legislation is good for them because it reigns in the financial services industry while giving the consumers benefits like discount pricing when using “their” branded cards. This sounds good until you examine the flip side - they will be able to discriminate against other cards by charging higher prices. Imagine having to carry a different card for each merchant, one for WalMart, one for Costco, one for Albertsons, one for Ralphs, etc. Worse yet, the costs of providing independent cards - e.g. the credit union's debit cards - will go up too. So much so that credit unions might not be able to offer those cards at all. So what is supposed to provide choice will actually end up doing the opposite.

Retailers claim if the fees are reduced, the savings will be passed on to their customers. HOWEVER, IN A RECENT CONGRESSIONAL HEARING, A RETAIL TRADE REPRESENTATIVE STATED THAT HIS INDUSTRY WOULD OBJECT TO ANY LANGUAGE OR GUARANTEE IN THE BILL THAT WOULD ENSURE SAVINGS WOULD BE PASSED DIRECTLY ONTO THE CONSUMER. And in other places where this legislation has been passed, the only ones benefited were the retailers. The legislation is bad for you, the consumer.

[steppenwolfsayshi]

01:32 AM on 06/28/2010

Too much credit has been screwing the consumer. Our savings rate is too low and household balance sheets are over leveraged. This should have happened 10 years go.
Citicard just canceled my credit card. I don't use it. And I'm not going to pay fees for something I don't need. When I have money to travel again, then I will get another one. Not from Citi, since I was always a good customer to them and the impersonal way they treated me and everyone else is irritating, but I don't mind paying fees to someone else, maybe a credit union.

[1088]

01:19 PM on 06/27/2010

IT'S BETTER THAN NOTHING, I'LL TAKE IT!

[The Rabbi]

09:34 PM on 06/27/2010

so you'd be happy with a car if it only had one wheel?

[japrz]

11:17 AM on 07/17/2010

He previousily owned a crippled horse. So a car with just one wheel is an up grade. :)

[JWoode]

12:28 PM on 06/27/2010

A good bill would never have passed...

[Troubledwawa]

08:15 PM on 06/27/2010

Sad,,,

And very true. Too much resistance in the Congress, the White House, the DNC, and the RNC.

[ThatsTheTheWayItIs]

09:20 AM on 06/27/2010

I suspect most here dissing the bill are Obama-haters, looking for any excuse. This bill changes a lot: just the requirement that banks keep 5% of the loans instead of selling them all as CDOs would have prevented the subprime crisis. Banks are not going to knowingly write bad loans if they have to keep even part of them.

BTW If you think 1/20th of the loan is too little, don't bother to reply, go learn about banking. Study "leverage" and "capital requirements". They are the causes of the meltdown, and the bill addresses both of them. (Hint: banks loan 20x the money they actually have, so if mortgages go bad, owning 5% of it is enough to put the bank out of business.)

No one including me knows whether this bill will prevent "too big to fail", you can't know. We will put new restrictions on drilling too, but many will argue that they are not enough.

No one knows, but everybody here is sure that they are right about this bill. Which they know nothing about, or banking, or economics ... They make for an amusing read.

[Troubledwawa]

09:15 PM on 06/27/2010

I'm not an Obama hater, and I think this bill is watered down to where it should be.

This bill should include the reinstatement of Glass-Steagall. Glass-Steagall would have also prevented this meltdown, and actually did for the 66 years that it was on the books, if you think about it. Seperating commercial banks (where the tax payer backed up) from bank holding, insurance, and brokerage companies was an ample protection for the tax payer. Like it or not - track records are fact.

And in addition, Glass-Steagall did prevent "too big to fail" simply by seperating the financial firms and who managed them. Now I know I'm not as smart as you according to your post, but I am smart enough to know that track records are fact. Glass-Steagall prevented too big to fail by not putting me, the tax payer, on the hook for the stupid decisions from these seperated financial engineerers/managers/idiots. That in turn increased the awareness of these so called investors - afterall, the caution that a person uses in investing is directly proportional to the amount of their own cash that is at risk.

"It's too hard on the banks", or "the waters are too murky for the banks", etc, etc, are not reasons to not reinstate Glass-Steagall. In reality, that's whining. The banks have already conformed once, and they can conform again. To their credit, they have a track record of doing so and still profiting.

[vippy]

12:30 PM on 06/28/2010

Thank you and I hope the people who are claiming this is a good bill will see it when the oil prices spike and they no longer can afford to go to work.

[ThatsTheTheWayItIs]

09:17 AM on 06/27/2010

I see the usual ignorant posts dissing this bill, saying it changes nothing.
I suspect they mainly come from the young, who believe that nothing changes.

People like me know differently. When we were young we faced being drafted, sent off to kill or be killed. Conscription is like a jail sentence, except it requires no crime and jail is safer.

When I hear young folks whine about how bad things are, that things will never change, I know they are wrong. Things do change, there is no longer a draft in the US. And we have civil rights laws, Medicare, the EPA - all things done in my lifetime.

[FunkyP]

12:27 PM on 06/27/2010

So why didn't they just repeal Glass Steagall?

[CTtransplant]

12:30 PM on 06/27/2010

That would have made more sense! And would not have taken as much time. Fanned and faved!

[ThatsTheTheWayItIs]

02:58 PM on 06/27/2010

You have it backwards, you mean "why didn't they reinstate Glass-Steagall"?

Answer: because it's not possible with destroying the whole financial system. It's like trying to put a genie back in a bottle.

Banks have had 12 years to reorganize their businesses. It's both unfair and not practical to ask them to take their businesses apart.

Congress repealed Glass-Steagall (and Clinton signed that repeal, BTW) because it wanted banks to have the freedom to go into the businesses they did. They practically encouraged it. It's unfair to now destroy the banks because Congress was wrong. The best they can do is try to regulate the existing system, change the things that are broken, and separate the businesses at least some (which they did with derivatives).

[SaigonHappened]

02:12 PM on 06/27/2010

BS the draft no longer exists. If you're a male citizen who wants a government student loan in this country you have to sign up for the draft. Period. Just because it's not being used (not directly anyway, think Stop Loss, for instance, and the relative lack of economic opportunity for many young people other than the military) doesn't mean it CAN'T be used. As for the rest, the right wing has been working overtime since 1980 to erode every one of those items you list, plus a whole long list of others that you didn't mention.
Christ, for that matter, what the h*** do you think Iraq and Afghanistan are if not Vietnam redux? All three are endless, pointless wars that erode the economy and, ultimately, the social fabric, back in America. The opportunity costs of these wars defy description. No lesson has been learned, none, and we will all pay, one way or another.
I wasn't old enough to have a draft number back in the day but I was old enough to watch that d*** war unwind this country and know it was happening. Now I'm old enough to be clear of the draft but, once again, I'm watching two g** d*** wars and the worst economy since the '30s unwind America. Wake up.

[ThatsTheTheWayItIs]

02:52 PM on 06/27/2010

More Americans died in Vietnam than in all other wars since then, including all terrorists acts, 9/11, Ft Hood, Lebanon barracks, you name it. 10x as many died in Vietnam as in Iraq and Afghanistan combined. Today's wars are relatively safe wars, fought against vastly outnumbered foes, who don't have superpower support from Russia or China.

Note that the Soviets were defeated in Afghanistan only because the US gave the mujihadeen advanced weapons. They don't have that support against us, we have it much easier than the Soviets.

These are wimp wars, and they are being fought with volunteers. In fact, the wars would have been expanded if we had a draft. As it is we had to use mostly National Guard, we don't have enough recruits. Thank the lack of a draft to keeping these wars small.

And because you have to sign up, that makes it the same as when we got drafted? Oh your poor young things, that must be so hard, filling in those forms. And BTW: you cannot now be drafted without an act of Congress; the draft is illegal. Registering for it is like answering the Census.

[tsdm]

09:04 AM on 06/27/2010

Has anyone seen a lobby group for the homeless, for the unemployed, for the disadvantaged, for the children etc.? Laws are sponsored, paid for and and for the benefit of those who pay for it namely special interest. Elected officials are only the front line in this game.

[binksmom85]

04:33 PM on 06/27/2010

that's why we need election reform and the end of corporate personhood; one of those we can actually work on now: http://movetoamend.org/tell-world

[SangZe]

07:57 AM on 06/27/2010

The bill makes your neighbors richer.

[RomeoMD25]

05:24 AM on 06/27/2010

Dodd and Frank writing the bill… is in itself enough to discredit the entire thing.