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Financial Reforms Legislation near Approval

By Faye Mergel
Published: Monday, July 5th, 2010

7Elected officials have made new policies which would directly have an effect on consumers. Reforms in the financial sector are now finalized, as long as the Congress and the Senate votes in favor of it in the days ahead.

Investors have been unsuccessful in their bid to get what they want. Action in their customer’s best interest is still not required from stockbrokers and annuity peddlers, which is an example of one of these failures. However, a free credit score would be accessible to millions of people.

A new government department would be created which would write rules for numerous financial institutions with assets amounting to less than $10 billion. This would be the autonomous Consumer Financial Protection Bureau. The president appoints a single director who is then confirmed by the Senate to head the bureau. According to Travis Plunkett who is the legislative director for the Consumer Federation of America, enforcement and supervision of smaller financial institutions still rests on the shoulders of their current regulators. An exemption to the supervision of the bureau would be automotive dealers.

An inclusion in the aforementioned piece of legislation obliges the provision of the individual’s credit score for free in the event that the credit score is what led to the individual’s high interest rate or refusal to be rented an apartment, for example. On the other hand, you may still get your credit score for free even if the result of the application is favorable and the landlord is not required by law to provide it.

The bill also provides new preventive measures which could be compared to calling the firemen after there’s nothing left of your house. An example would be the provision that the borrowers’ earnings and assets are required to be scrutinized by the lenders but most lenders already learned this the hard way or have died away.

Another regulation included is a prohibition on prepayment sanctions for persons with intricate kinds of mortgage like the adjustable rate. Also, bonuses given to mortgage brokers and bank employees depending on the type of loan they avail will no longer be earned in order to remove any enticement to push high-interest loans to people who might choose other better deals just to increase bank profits.

Merchants also now have the Congress consent to let you use your credit card only if you spend more than a certain amount as long as the minimum is less than $10. However, the Federal Reserve can increase the minimum amount of it wants to and the federal government along with universities and colleges can set maximums. Merchants would also be allowed to give discounts to persons who utilize cash and debit in lieu of their credit cards.

Merchants will also be prohibited from offering discounts depending on the issuer of the card used. Due to the reason that mostly big financial institutions are subject to the cap set by the Federal Reserve to limit the fees stores pay to accept debit cards, merchants.

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