Update

Buried in the 2,300 pages of provisions that make up the new financial reform law is a measure that allows the Securities and Exchange Commission (SEC) to deny requests for information, even those that come under the Freedom of Information Act.

The new law says the SEC doesn’t have to reveal documents that come from "surveillance, risk assessments or other regulatory and oversight activities." Critics say that provision pretty much covers all of the SEC’s activities, which means the SEC has a free pass when it comes to FOIA requests.

SEC Chairman Mary Schapiro insisted in a letter to Congress that the new provision does not give the SEC a blanket exemption to FOIA requests. She explained that the provision helps further the agency’s goal of providing better Wall Street oversight. For example, investigations into insider trading are easier if the SEC can assure trading firms that personnel records, trading strategy, and other information will be kept confidential.

Update

Congress passed the final version of a sweeping financial overhaul bill intended to reform Wall Street and boost consumer protections. The bill’s next stop is the President’s desk where it’ll be signed into law.

The measure is called the Dodd-Frank bill after its sponsors Sen. Christopher Dodd and Rep. Barney Frank. A heavy 2300 pages, it touches on almost every aspect of America’s financial system--from banks, mortgages, insurance, and securities to credit reporting and corporate executives’ pay.

Key provisions important to consumers include:

  • Establishing the Consumer Financial Protection Bureau. This watchdog agency will regulate financial companies to ensure consumers get accurate information and fair treatment when obtaining mortgages, credit cards, student loans, and other financial services
  • Credit score protection. Consumers get free access to scores that negatively impact lending or hiring decisions.
  • Mortgage reform. Regulations are intended to prevent hidden fees and bad lending practices that trap homebuyers in loans they can’t repay.

Original Article

The past five years have wreaked havoc on nearly every segment of the US economy. Giant corporations have fallen or nearly fallen and have been bailed out. Small companies have closed their doors.

Due to the near-collapse of the US economy and the continuing struggle for recovery, the federal government is in the process of overhauling the US financial system. One major effort is the creation of a new consumer watchdog agency. Other reforms are complete or in the works, too.

New Dog on the Block

In late May 2010, the US Senate voted for a new law designed to make broad changes and reforms throughout the US financial system. If passed into law, the Restoring American Financial Stability Act of 2010 creates the Consumer Financial Protection Bureau (CFPB).

This new agency will be part of the Federal Reserve and will have the power to make new rules and regulations on all sorts of consumer credit transactions to make sure, for example, your credit application is treated fairly and you're protected from high interest rates and excessive fees in things like:

  • Car loans, where consumers have been victimized by car dealers who get kick-backs for steering them to lenders with high interest rates, among other abuses
  • Credit cards, including a cap on the "swipe fees" charged to retailers and merchants by credit card companies, which essentially increases your cost when buying their goods or services
  • "Payday loans," including rules on how many loans you and I can take out and increasing the time to repay the loans
  • Mortgages, and particularly the "interest only" mortgages that were at the center of the financial crisis and crash of the real estate market in 2008 and 2009

Not all of these changes are brand "new." For instance, there's been some talk and movement about reforms in the debt settlement business. One senator wants to add new rules on it to the financial reform bill. And the CARD Act of 2009 and the Federal Trade Commission already made significant changes in credit card rules. This is the first time a new agency will be in charge of overseeing and regulating such a wide array of consumer credit transactions, though.

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Tagged as: Consumer Law, Consumer Contracts, us financial system, consumer contract lawyer