Gallagher & Associates Team

Gallagher & Associates Team

Thursday, July 22, 2010

New Banking Laws

On July 21, 2010 President Obama signed a sweeping new consumer financial protection law which seeks to end some of the banking practices that resulted in the current condition of our economy. The legislation gives the government new powers to break up companies that threaten the economy, puts more light on the financial markets that escaped the oversight of regulators and creates a new agency to guard consumers in their financial transactions

The law is entitled the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new law creates new federal agencies including: Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection. The Council is charged with maintaining the country’s financial stability.
Large, failing financial institutions would be liquidated and the costs assessed on their surviving peers. Borrowers will be protected from hidden fees and abusive terms, but also will have to provide evidence that they can repay their loans.

The Federal Reserve will get new powers while at the same time coming under they can repay their loans. The Federal Reserve will get new powers while at the same time coming under expanded congressional oversight.

The law creates a new watchdog agency within the Federal Reserve that will be charged with protecting consumers in financial transactions and gives the government more power to break up failing companies. It also gives the Federal Reserve more power, while subjecting the central bank to greater congressional oversight.

The package is expected to cost $19 billion, and it would include $3 billion in new funds to help unemployed homeowners avoid foreclosure and $1 billion to enable local governments to buy and rehabilitate foreclosed and abandoned properties and sell them to low and moderate-income buyers.

It sets up an independently funded Consumer Financial Protection Bureau, which would supervise and regulate mortgage and credit-card products, including payday lenders. Some of the broad based consumer protections include:

• Overdraft Protections
• Credit Card Swipe Fee Limits
• Limitations on Mortgage Broker Commissions
• Practical Mortgage Underwriting Standards (“Liar Loans”)
• Regulation of Credit Rating Services
• Fiduciary Duty Protections for Consumers in Banking
• Predatory Lending Prohibitions and Penalties

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