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

First Posted: 06/26/10 10:44 AM ET   Updated: 05/25/11 05:55 PM ET

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.

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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Filed by Ryan McCarthy  |