In response to the financial meltdown that began in the U.S. more than two years ago, the Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as the Financial Reform Bill, was recently signed into law by President Obama. After more than 8 million jobs were lost and hundreds of banks closed, financial reforms have finally been put in place. But what’s in the bill and what does it mean for your wallet? Here’s a rundown of the parts of the bill that apply directly to you.
Consumer Protection: An independent Bureau of Consumer Financial Protection has been created. Its role is to see that the rights of consumers are protected and that financial regulations are in place.
Mortgages: The Consumer Financial Protection Bureau will oversee the lending industry, by protecting borrowers from deceptive mortgage lending practices and ensuring that mortgage application forms are written in language that is easy to understand. So now you’ll actually have a clue about what you’re agreeing to when you sign your application. This will prevent you from taking on a loan you don’t need or can’t maintain.
Credit Cards: The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 will be enforced by the Consumer Financial Protection Bureau. Terms of credit card agreements, such as interest rates, will be clearly disclosed.
Banking: Now, you’ll be asked whether or not you want to opt in or out of banking overdraft fees. So if you don’t opt in for overdraft coverage and a purchase pushes you over your limit, your purchase will be declined. If you do opt in for overdraft protection, you’ll be charged a fee if you go over your limit. Read more about this change in the blog post, “Get Ready for Changes to Your Debit Card.“
For more details about the bill, pick up the October 2010 issue of Black Enterprise Magazine. Also check out Senior Personal Finance Editor John Simons’ blog post, “Financial Reform Bill: It’s About Time.”
Sheiresa Ngo is the consumer affairs editor at Black Enterprise.