Overview: Senate passes financial reforms, final bill expected in July

May marked an important milestone for the U.S. Senate, as lawmakers passed a financial reform bill after months of haggling on both sides of the aisle.

The measure passed by a vote of 59-39 on May 20, and included a number of provisions aimed at protecting consumers while also regulating the financial industry.

Now, members of the Senate will have to work with their counterparts in the U.S. House of Representatives to iron out differences in the bills passed by Congress. The House passed financial reforms at the end of last year.

Senator Chris Dodd, the primary force behind the Senate’s measure, and Representative Barney Frank recently met with President Barack Obama. The two lawmakers said they expect a reconciled bill to be on the president’s desk by Independence Day.

Senate, House differences

Although the two bills are rather similar, a number of differences remain. For example, both measures include the creation of a federal-level agency that would monitor the products offered to consumers, including credit cards and home loans.

However, the Senate’s plan would be to contain that regulatory office within the Federal Reserve System, whereas the House wants to create a wholly separate Consumer Financial Protection Agency.

Amendments to Senate’s plan

On its way to being approved, the Senate’s bill saw a number of attempts at amendment. Illinois Democrat Dick Durbin suggested a provision that would allow merchants to set minimums when it comes to credit and debit card transactions.

Doing so would help retailers losing money on smaller transactions because of the interchange fees they have to pay to card networks like Visa and MasterCard. Durbin’s measure was added to the final bill that passed the Senate.

So was a change suggested by Colorado Democratic Senator Mark Udall, which would give consumers free access to their credit score if it factors in to them being denied for a loan or employment. Currently, consumers do have free access to their credit report but have to pay to see their score.

One measure that was not included in the Senate’s bill was a recommendation made by Senator Sheldon Whitehouse, who wanted credit card companies to adhere to interest rate caps set at the state level. Currently, interest rates offered by card issuers are limited by the laws of the state in which they reside, rather than those where their customers live.

Posted in: Banking, Credit Cards, Loans

Banking News: This article was published on 5-31-2010 at 10:31 am.

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