On Wednesday, President Obama signed into law the Wall Street Reform and Consumer Protection Act in the nation’s capital, surrounded by consumer advocates, members of Congress and American’s who have been impacted by the financial crisis.
Dubbed as the most sweeping reforms of the financial system since the Great Depression, Obama told his audience that getting the bill through Congress was no easy task.
“..We had to overcome the furious lobbying of an array of powerful interest groups and a partisan minority determined to block change”, Obama said. “So the members who are here today, both on the stage and in the audience, they have done a great service in devoting so much time and expertise to this effort, to looking out for the public interests and not the special interests.”
Observing that a significant factor underlying the severe recession was a breakdown of the financial system, Obama said that the Act demands accountability and responsibility from everyone, including bankers and financial institutions. He said that taxpayers will never be asked again to foot the bill for Wall Street mistakes, as in the case of AIG.
“It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington”, Obama said. “For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy.”
The new law demands accountability and responsibility for everyone, Obama said, and provides certainty to everybody, from bankers to farmers to business owners to consumers. “And unless your business model depends on cutting corners or bilking your customers, you’ve got nothing to fear from reform”, Obama said
Obama opined that with this law, credit card companies would no longer be able to apply indiscriminate rate hikes nor banks apply overdraft fees on a checking account. He also said that the abusive practices in the mortgage industry would no longer be allowed, bringing an end to hidden penalties and fees in complex mortgages.
Under the new Act, perhaps most significantly, a consumer protection agency will be established with sole responsibility for ensuring that consumers are protected, while setting clear rules by which banks, mortgage companies, payday lenders and credit card lenders are to be held accountable.
See the 10 Things that consumers may want to know about the Wall Street Reform and Consumer Protection Act, prepared by White House Deputy Communications Director, Jen Psaki:
- Stronger protections for consumers against unfair credit card practices like rate hikes for existing credit card balances.
- Mortgage brokers will be prohibited from making higher commissions by selling mortgages they know consumers can’t afford.
- Free annual credit scores so people can stay on top of their finances. [Clarification: free credit scores are available if you receive worse terms on a loan because of something on your credit report, or if you are rejected.]
- No more taxpayer-funded bailouts. If a company can’t make it, it will have to liquidate.
- Greater input by company shareholders over how much a CEO gets paid. And companies’ compensation boards are now required to be truly independent.
- Brokers who offer investment advice will have to act in the best interests of their customers, not their own financial interests.
- Financial firms won’t be allowed to grow so large that if one fails, it will affect the entire financial system.
- There will be one agency whose sole job is to make sure that consumers get the protections they deserve and to set clear rules to hold banks, mortgage companies, payday lenders, and credit card lenders accountable.
- Businesses can’t be charged extra fees for debit card “swipe fees” that exceed the cost of processing transactions.
- You can learn plenty more here at WhiteHouse.gov or at financialstability.gov
