Will Yet Another Government Agency Really Protect Consumers?

Here in the U.S. we have a multitude of laws to protect consumers. The Credit CARD Act of 2009 added many, and many were in place before.

So why do we need a new Consumer Protection Bureau?

Apparently, the problem has been lack of enforcement. The new agency is supposed to fix this problem by concentrating all the financial watchdog agencies under one roof – thus facilitating enforcement.

The new agency will cover almost every kind of financial transaction affecting consumers – and will have both money and a new mission: That of protecting consumers from bad practices in the financial industry. This protection will be it’s one and only job.

Does that mean that in the past the laws were in place, but no one was charged with the responsibility of enforcing them?

The new agency will be required to act on consumer complaints. They will conduct investigations, and as a result, dishonest companies will be fined or sued for damages, or referred to the Justice Department for prosecution.

Our new watchdogs believe that some of us need more protection – or better protection – than others. Thus, those groups that are most frequently targeted by dishonest lenders will be protected by  special offices within the Consumer Financial Protection Bureau. These offices will concentrate their efforts on investigating complaints from minorities, active military personnel, and senior citizens.

It looks like this new agency just became a new agency with three sub-agencies. But no, the new law also charges the new agency with the creation of an Office of Financial Education. This office will begin a campaign to educate consumers. So make that four sub-agencies.

Some provisions of the new Act are a repeat of the CARD Act – such as the requirement that banks and credit card issuers must clearly disclose their terms and fees, and that bills must be clear and understandable. Others are an addition.

For instance, under the new Act, creditors who turn down an applicant or raise fees must provide the consumer with the credit score that was used in decision-making. In addition, upon request, financial institutions must furnish consumers with a usable electronic copy of their financial history with that institution.

Two exceptions…

Interestingly, auto dealers who broker loans will not be regulated under this act. They broker billions of dollars in consumer loans every year, but remain exempt from the new regulations and consumer protections.

Securities transactions will still be overseen by the Securities and Exchange Commission.


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