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Consumers Get a Watchdog Agency

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http://online.wsj.com/article/SB10001424052748704569204575329130754875618.html

The landmark financial-markets legislation expected to be signed into law next week was intended mainly to reduce systemic risk and increase regulation at the corporate level, but it will also alter many aspects of financial life for consumers and individual investors.

Consumer advocates publicly hailed the creation of a watchdog agency intended to monitor the safety of financial products for consumers, while privately expressing concern that many areas remain insufficiently regulated.

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Consumer-protection agency. The Consumer Financial Protection Bureau, part of the Federal Reserve, will oversee a broad range of retail financial products, including checking accounts, private student loans and mortgages. Auto dealers are exempt from the agency's oversight.

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Deposit insurance. The temporary increases in coverage put in place by the Federal Deposit Insurance Corp. during the financial crisis will become permanent. Henceforth, up to $250,000 in qualified deposits will be insured.

Mortgages. Lenders now must verify a borrower's ability to repay before any mortgage loan is made. The bill also stamps out prepayment penalties. Brokers will be prevented from receiving bonuses for steering borrowers toward riskier loans. A $1 billion emergency loan fund will be established to help keep people in their homes.

Credit scores. Consumers will get a free credit score when they are denied a credit card or receive a poor mortgage rate. The FICO score, calculated by FICO, formerly known as Fair Isaac Corp., is likely to be the measure that most consumers will see, said Adam Levin, chairman and co-founder of Credit.com.

Credit and debit cards. Retailers can now offer discounts based on different kinds of payment methods—say, lower prices for using cash rather than a debit or credit card. But they can't offer discounts across brands—by distinguishing between Mastercard and Visa cards, for instance. Merchants can refuse to take credit cards for purchases of $10 or under.

Investment advice. The new bill instructs the Securities and Exchange Commission to study whether a "fiduciary" standard—requiring stockbrokers, financial planners and insurance agents to put their clients' interests first—is appropriate. Also subject to further SEC study is the question of whether investors should be freer to initiate proposals to be voted upon at companies' annual shareholder meetings.

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I am very dissappointed that the auto dealers are not under the new consumer protection agency. They have some of the most abusive tactics that we as consumer's face fairly regularly, especially in the F&I office. Guess they have a very strong lobby. :(

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Nice, discounts for cash over debit cards. That will simply move me to be on a cash basis even more.

As for the auto industry, just make sure you get your loan at the bank before starting looking for a car, This way you know how much you have and don't have to deal with the F&I department. Just don't tell the salesperson you have financing until the price is final.

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I have my financing lined up with a CU before going in to buy - but there are lots that don't and end up with the worst financing. I see people that have loans on vehicies that rival house mortgages! Its a real shame. Ok end of rant for now. :)

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Most of what the law is intended to correct will get watered down in rulemaking. Most people don't understand that when Congress passes a Bill like this it instructs various regulatory agencies to issue rules to enforce the law. So the Bankers get two shots at sinking the intent of the law. First with the lobbyists in Congress and then in the back-office dealing that results in the final rules issued. The public never sees or hears about what goes into the making of the final rules.

I expect only the things that the law has specifically worded prohibitions on will actually have a chance of being enforced.

Oh, and this whole 2000 page law they passed....No private right of action whatsoever. So there you go. You can file a complaint with the regulating body but they have no authority to take action on individual claims....and you have no right to sue yourself. Only large documented abuses that are creating headlines and costing votes to people looking to stay in office will ever be addressed.

Lastly, being a US law, it is unenforceable on foreign companies. And I highly doubt we will be able to get every other country on the planet to enforce these same changes. There will always be somewhere companies can ship operations off to where this law can't touch.

Edited by Methuss

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I expect only the things that the law has specifically worded prohibitions on will actually have a chance of being enforced.

Oh, and this whole 2000 page law they passed....No private right of action whatsoever. So there you go. You can file a complaint with the regulating body but they have no authority to take action on individual claims....and you have no right to sue yourself. Only large documented abuses that are creating headlines and costing votes to people looking to stay in office will ever be addressed.

The Force is strong with this one.

Regulations are pointless unless they are enforced. As this one fails to have a private right of action, it's essentially worthless.

It does not take 2,000 pages to write a law that allows the "cash discount" and new mortgage requirements. My guess is that when the president signs the bill we are all going to get hosed, again.

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