Highlights
Of Wall Street Reform and Consumer Protection Act
Landmark consumer protection
• Consumers will have an independent advocate - the Consumer Finance
Protection Bureau - on their side to prevent tricks and traps related to
mortgages, payday loans and checking accounts.
• Credit cards and mortgages will offer terms in language we can all
understand.
• Banks will not be allowed to charge businesses hefty fees for
debit-card purchases.
Shines
light on shadow markets
• The $600 trillion derivatives market will now operate in the
open, so regulators can catch problems before they happen.
• Most deals will have to be backed up by a separate clearinghouse
and traded on public exchanges.
• Participants will have to prove they have the money to cover their
bets.
Prevents
taxpayer bailouts
• The government will have the authority to step in and safely shut
down any failing financial firm.
• One regulator will be in charge of watching for emerging threats to
the entire financial system – and will have the tools and authority to
ensure those threats are actually visible.
Reins in the Wall Street casino
Banks will be barred from gambling for their own account with your
money. Banks will have to separate some of their derivatives trading
operations into affiliates.
Mortgage
reforms
• For the first time lenders are prohibited from making loans that
borrowers cannot repay, and banned from receiving kickbacks for steering
people into high rate loans when they qualify for lower rates.
• Consumers are protected from abusive loan fees and penalties for
prepaying.
Strong
investor protections
• Shareholders will have new tools to hold corporate boards and
management accountable.
• Brokers will have to act in the best interests of their customers.
Holds credit Rating agencies
accountable
• Credit rating agencies will no longer have a vested financial
interest in giving high ratings to risky investments.
• Better controls will hold rating agencies accountable for the
reliability of their reporting.
• Investors will be able to sue credit rating agencies who slap a
high rating on a risky investment.
Opens the Fed’s books
• The Fed’s emergency lending programs from the financial crisis will
be audited to see where the money went.
• The Fed will also have to disclose loans it makes to banks through
its discount window.
Banks
must pay up
The largest financial firms have to pay $19 billion to ensure
oversight to prevent another financial crisis.
Banks must have “skin in the game”
Banks that package loans must keep 5% of the credit risk on their
balance sheets.
