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5 Top financial reform in the market

A new reform bill known as Dodd Financial Reform Bill have been passed to give better protection to consumers. The bill mainly focuses on regulations for Wall Street, and gives more power to the Federal Reserve. Also a new monitoring institution has been designed to focus on the various credit and lending institutions.

The 5 Changes are:

1. The market gets a new monitor: The market gets a new monitor, the Consumer Financial Protection Bureau (CFPB) who will monitor over the lending institutions and the process. This new agency has been created to provide added protection to the consumers. CFPB is also supposed to provide education to the consumers through the Office of Financial Literacy, and take complaints by the consumers against illegal financial practices.

2. Regulation on private student loan: Government took over the power of government student lending (subsidized government loans) in 2009 but private student lending remained mostly the same. Generally, private student loans don’t come with the same protections which government student loans provide. This bill aims to bring the private student loan industry under the thrift supervision of CFPB.

3. New mortgage lending rules: The bill requires the lenders to retain an interest of atleast 5% on the loans they give. Thus getting a mortgage will be more difficult for the low income consumers. You will have to show that you can afford to make payments on the mortgage, only then can you take the mortgage. However, this will also mean that you won’t be wrongly steered into a mortgage which you won’t be able to pay.This reform also aims at strengthening the appraiser independence so that banks can no longer influence home values.

4. Credit and debit card rules: According to the new reform you will be able to use a credit or debit card only if you make a purchase of atleast $10 or more than that. This means that merchants can refuse your credit card or debit card if your purchase amounts to less than $10.

5. Free credit score: Previously the credit score was not available for free. Now, the new reform provides free access to your credit score if you are denied a credit card or a loan. Whenever you will fail to get new credit, you will be able to get a free copy of your credit score.

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