The Financial Reform Bill passed by the US Senate on July 15th, 2010 has introduced some significant changes in the Wall Street regulations. One of the most important features of this bill is the creation of a Consumer Financial Protection Bureau within the Federal Reserve which will supervise consumer financial products offered by mortgage companies, credit cards, debt settlement firms, loan providers, payday lenders and banks.
The new Bill has strengthened consumer protections in the following ways:
- A new organization is created to regulate and supervise a variety of financial products.
- Consumers will get more protection with the new mortgage lending rules.
- Consumers will be entitled to receive free credit score, if the score is responsible for the denial of a credit application or a job.
How the Financial Reform Bill will affect consumers
Let's check out the ways by which this new Reform Bill will affect consumers in one way or the other:
1.Higher fees for bank accounts: Banks, all over the US, are set to lose lots of dollars due to this new Bill. As a result, banks may try to cut that loss by increasing fee payments for consumers with bank accounts. Bank of America is already planning to start a new fees structure by the end of this year.
2.Mortgage rates: The new Financial Reform Bill can make it harder for a consumer to qualify for a mortgage and lead to higher rates. The consumer will also be required to provide proof that he can afford the mortgage.
3.Credit card usage: The new Bill ensures that retailers require a minimum purchase of $10 by consumers to be able to use credit cards for making payments. Most consumers will find this inconvenient since they would be required to carry cash for purchases smaller than $10.
4.Destroys financial privacy: The New Financial Reform Bill is also likely to destroy financial privacy of consumers since the Federal Reserve will be able to monitor all transactions made.
The new Financial Reform Bill has certainly strengthened consumer protections and will improve the stability of the financial systems. But only time will say if this new Bill will actually be able to help the US economy revive gradually.