Financial Reform Victory!

On July 21, 2010, President Obama signed the Financial Reform and Consumer Protection Act of 2010 into law, and we were there to witness it.

This bill includes many provisions that AFFIL, AFR, and our allies have been fighting for for years.  Among other things, it will:

• Create a Consumer Financial Protection Bureau. Finally, we will have a regulator with the sole task of protecting consumers and preventing tricks and traps related to mortgages, payday loans, checking accounts, and more.  Read more.
• Shine light on shadow markets. It will require that the derivatives market operates in the open, that participants have the money to cover their bets, and that hedge funds and private equity funds are registered with the SEC so they can have regulators watching over them.  Read more.
• Prevent taxpayer-funded bailouts. The government will have the authority and the tools to step in and safely shut down any failing financial firm instead of propping them up with taxpayer money, and will watch the market to prevent this from being necessary in the first place.  Read more.
• Protect consumers when buying homes. For the first time, lenders will be prohibited from making loans that borrowers cannot repay, and banned from receiving kickbacks for steering people into high rate loans when they qualify for lower rates.  Consumers will also be protected from abusive loan fees and penalties for prepayment.
• Hold credit rating agencies Accountable. Credit rating agencies will no longer have a vested financial interest in giving high ratings to risky investments. Better controls will hold rating agencies accountable for the reliability of their reporting.  Investors will be able to sue credit rating agencies who slap a high rating on a risky investment.   Read more.

The final product isn’t perfect.  Auto dealers will be exempt from CFPB regulations even though they are consistently the top source of complaints filed through the Better Business Bureau and state and local consumer protection agencies.  We wish we had gotten even closer to breaking up the big banks and dealing with “too big to fail” institutions, but we at least made advances in these areas.

There is always more work to be done – and new tricks to deal with – but this legislation goes a long way to establish the important protections that consumers need and deserve.  Thanks for all your help getting here – we couldn’t have done it without you.