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The Bureau of Consumer Financial Protection

The Bureau of Consumer Financial Protection

 

            On July 15, 2010, the U.S. Senate voted 60-39 to approve the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The bill -- representing the most sweeping financial restrictions since the Great Depression -- gives Congress the right to break up corrupt banks and other financial institutions, eliminates proprietary trading, and ends the practice of bailing out banks in trouble.

 

In other words, it increases oversight of the financial industry in an effort to prevent the kinds of practices that many believe have led to -- or worsened -- the financial crisis. But what about the average Joe (or Jane) with 2.5 kids, a car and a mortgage?  The idea of massive bank bailouts and financial firms earning record profits hasn't sat well with consumers feeling the pinch of the recession, either

 

While it won't apply to certain industries -- automotive in particular -- the new law does create a new office, to be called the Bureau of Consumer Financial Protection. It's not an entirely new bureau, since it will pick up consumer protection responsibilities from several entities that already exist, such as the Federal Trade Commission. Once the transition is complete, the office will be able to regulate a wide variety of consumer financial services, from online banking to high-interest payday loans.

 

            The Bureau of Consumer Financial Protection will operate under the auspices of the Federal Reserve and should be up and running by the end of 2011. It will ultimately set rules and regulations for any business that provide financial services to consumers, controlling a host of financial products that include:

 

  • Deposits
  • Credit extensions and loan services
  • Property leases and purchases
  • Real estate settlements
  • Check cashing, collection and guaranty services
  • Online banking
  • Financial advisory services
  • Credit reports and other consumer financial reports
  • Debt collection

 

            Right away, consumers should notice one thing: Their contracts will become easier to understand. The new law requires banks and other financial entities to do away with the kind of hidden fees and disclosures that they used to bury within the fine print. Congress' goal was to make consumers more aware of the impact of any purchases or financial decisions they make, which would ultimately make them more informed and spur competition.

 

 

 

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