Friday, congressional negotiators announced a financial reform bill agreement. It will be voted on by the House and Senate next week. The financial reform bill changes most of the rules that form the relationship between financial institutions and consumers. Some call the financial reform bill a big win for consumers. Others feel consumers could be shafted.



Resource for this article: Financial reform bill agreement touted as a big win for consumers by Personal Money Store



New consumer protection agency



The financial reform bill gives all of its consumers a brand new agency to view out for their interests. The Consumer Financial Protection Bureau will monitor loan products to keep consumers safe. Business Week reports that Democrats defeated all of the Republican efforts to scale back the powers of the proposed consumer agency. But the financial reform bill sets up an independent bureau with independent funding. It could be part of the Federal Reserve and has the power to write and enforce rules banning abusive practices in credit-card and mortgage lending.



Consumers hurt by Fiduciary standards?



A provision in the financial reform bill that requires all of the brokers to abide by a fiduciary standard when they give investment advice has those in that industry crying foul. David Loeper of Forbes says that part of the financial reform bill is going to hurt the protection of consumers. He feels that way because the bill calls for brokers to be held to a fiduciary standard enforced by the Securities and Exchange Commission, just as investment advisers are today. As reported by Loeper, that means consumers won't be able to tell the difference between brokers and investment advisers. Evidently he feels that being able to trust both species equally is not such a good thing.



Oversight is consumer agency consolidation


The financial reform bill's Bureau of Consumer Financial Protection would consolidate oversight of a wide variety of financial products, including mortgages, credit cards and payday loans. ABC News reports that responsibility for these areas is at the moment scattered across a variety of government agencies. Experts explain that creating a single supervisor will help make financial products easier to understand and not take unfair advantage of borrowers.

Leadership of consumer protection



The consumer Financial Protection Bureau was designed by Elizabeth Warren, who was a Harvard Professor who's chairwoman of the congressional oversight panel for the Troubled Asset Relief Program (TARP), the $700 billion government bailout of the financial industry. Democratic Senator Sherrod Brown of Ohio told Business week that he "would love" to see Warren appointed to head the agency. You will find numerous individuals who want to see Warren in charge according to Brown.



Don’t dare mess with Elizabeth Warren

Warren called for regulations to limit credit-card contracts to a short, easy-to-read document, curb bank overdraft fees and make online credit scores free. In an interview that she had with USA Today she said:



"I found the extent to which the business model of selling debt to middle-class families has changed over the past 20 years. The credit card companies and other lenders moved to a tricks and traps pricing model. The fees, the rate of interest hikes and all the other surprises within the fine print have left families increasingly vulnerable. I viewed hardworking, play-by-the-rules middle-class families collapse financially, and that led me to study the consumer credit market and eventually to the idea behind the consumer financial protection agency."



A lot more data on this topic



Business Week

businessweek.com/news/2010-06-22/warren-should-head-new-consumer-agency-brown-says.html

Forbes

blogs.forbes.com/investor/2010/06/25/financial-reform-bill-will-shaft-consumers/

ABC News

abcnews.go.com/Business/article/financial-reform-bill-means-big-consumers/story?id=11012343&page=1

USA Today

usatoday.com/money/companies/regulation/2010-06-24-warren24_ST_N.htm