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July 13, 2010

  • News:  Financial Reform For You

    Americans could be seeing new financial reform legislation soon if President Barack Obama gets his way. As with the Credit CARD Act 2009, many consumers will find the details of the more than 2000-page law confusing and, understandably so. The bill known as the Dodd-Frank Wall Street Reform and Consumer Protection Act has already passed through the House of Representatives and is expected to be voted on within the next few days by the U.S. Senate. The most controversial part of the bill is the creation of a Consumer Financial Protection Bureau. The bureau will be set up within the Federal Reserve and will be watching over ALL activities surrounding the financial industry. In addition to being a watchdog over the credit card industry, consumers can expect the agency to be monitoring activities pertaining to full and fair disclosure in the mortgage market, payday loans and other financial products. The agency will also be designed to ensure that credit card companies and other lenders are not practicing with hidden fees, scams and predatory lending.

    According to Chris Meyer of the Consumer Union, a need for the agency surfaced during recent years when credit card companies and other lenders began having a difficult time separating their interest from those of the consumer. As a result, consumers lost. The most appealing part of the agency from a credit cardholder's point of view is the fact that they will now have one entity to go to for all financial concerns. No more wondering who to call. The agency will make the rules and more importantly, enforce the rules.

    Of interest to retailers, especially those gas/convenience store chains and small businesses, the bill is expected to cap fees on credit card payment transaction fees known as interchange fees. The bill will also allow merchants to set minimum card purchases. The bill will also require lenders to thoroughly check an individual's capabilities of repaying debt prior to approval of any credit loan. Pre-payment penalties, refinancing fees, or early mortgage payoff fees will be banned with the institution of the new law. Bonus structures for loan officers and mortgage brokers will also be addressed and practices of paying bonuses for selling more expensive mortgages will be prohibited.

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