July 7,2009
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Consumer Finance Protection Agency, Pt.3
What will they be watching?The new legislation will provide a watchful eye over a number of areas; beginning with mortgages. The credit card crunch has created a great deal of stress and pain for many Americans only second to the mortgage crisis. The legislation requests lenders provide a "plain vanilla" default mortgage similar to the plain set of standards required of the credit card act. These types of standards would give consumers a clearer understanding of the responsibilities and consequences of signing mortgage papers. Let's face it; most consumers are concerned about two things when they sign mortgage papers; interest rate and monthly payment. Just as in credit card contracts, mortgage contracts have pages and pages of fine print terms and conditions. A "plain vanilla" contract would level the playing field for Americans who are less knowledgeable in the financial world.
Of course, the agency would also have jurisdiction over the credit card industry including the responsibility for enforcing the rules of the Credit Card Accountability Responsibility and Disclosure ACT (CARD) as well as handing out stiff penalties to any violators. The CARD extends beyond protection of unfair and deceptive practices by lenders by also banning financial institutions from marketing or issuing cards to individuals under the age of 21 without a co-signer. Furthermore, the new proposal calls for lenders to provide full disclosures and clearly written language in communicating to consumers all conditions relating to their financial products.
Under the act's provisions, the agency gains the power to refer any individual or organization for criminal charges to the Attorney General to institute criminal charges. Additionally, the act protects any individual or employee of any credit card company, financial organization or any other organization who might provide information to the agency pertaining to violations and enforcement of the law. All consumer financial protection functions and powers of the Board of Governors, Comptroller of the Currency, Director of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the NATIONAL CREDIT UNION ADMINISTRATION would be transferred to the new Consumer Financial Protection Agency.