After waiting weeks for the Senate to give him the nod, President Obama finally signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law this past month. The New York Daily News called it the toughest set of financial regulations passed since the Great Depression.
While the president faced opposition from the United States Chamber of Commerce, among other businesses and organizations, the Times reports that Democrats celebrated the new legislation after the devastating recession that hit the nation in 2008.
"Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes," Obama said before signing the legislation, according to the Times. "There will be no more taxpayer-funded bailouts. Period."
As a result of the new legislation, banks and lenders can no longer bury fees and interest rates in lengthy terms and conditions. According to CBS News, credit and debit cards will also be regulated under the new laws, along with overdraft fees.
While consumers still assume a certain amount of responsibility in regards to borrowing from banks, the Act provides a relatively large amount of protection. Lenders must now make sure a borrower has the financial means to repay a loan prior to giving them approval, eliminating predatory lending.
New credit card legislation in light of the 2009 Credit Card Accountability, Responsibility and Disclosure (CARD) Act made news this month when issuers struggled to find new ways to make a profit. The Act instituted restrictions on high interest rates and hidden fees, forcing credit card issuers to rely on swipe fees and cash-advance fees for a new means of profit.
According to CNN Money, a study published this month by the Pew Charitable Trust Group indicates that these loopholes that credit card issuers are finding may warrant government regulation. There has been little action taken thus far, but as issuers adopt more shady practices to get around new legislation, this may change.
In order to protect themselves from these new practices, consumers can read their statements thoroughly and monitor their credit. Credit card issuers are required to inform members when there are changes made to their lines of credit, interest rate or fees. While the CARD Act and the Dodd-Frank bill are aimed toward making the intentions of banks, lenders and credit card issuers more transparent, the new legislation is not flawless.
Banking News: This article was published
on July 30, 2010 at 2:01 pm.
