Congresswoman Chellie Pingree today welcomed Senate passage of the most historic Wall Street reform since the Great Depression. Wall Street reform legislation originally passed the House last year and again late last month. The Senate passed the bill today and President Obama is expected to sign it into law.
 
“This is strong reform that will hold the big banks accountable and prevent the reckless behavior that caused the economy to collapse and cost 8 million American jobs,” Pingree said.  “It also cracks down on speculation of home heating oil, which adds significantly to costs for Maine families.”
 
The law will create a strong Consumer Financial Protection Bureau, an independent watchdog agency whose sole mission is to regulate big banks and credit card companies and protect consumers.
 
“We need an agency that requires credit card companies and banks to explain their terms in plain language that everyone can understand and do away with the fine print and hidden fees,” Pingree said.  “We have agencies that make sure our food and kitchen appliances are safe, it’s time we do the same for financial products.”
 
The bill also limits speculation on home heating oil, which experts say adds significantly to what Maine families pay to heat their homes.
 
“Speculation adds about $1 a gallon to the cost of home heating oil,” said Jamie Py, President of the Maine Energy Marketers Association.  “This reform will crack down on that speculation and should lead to lower prices for home heating oil.”
 
Pingree also said the reform bill is fully paid for, in part by ending the TARP fund on early, and putting the unused money to work protecting consumers.
 
“This bill doesn’t add one dime to the deficit,” Pingree said.  “Any additional expenses in it are paid for in part by shutting down the bank bailout fund and putting that money to work protecting average consumers instead of Wall Street.”
 
 
The Wall Street Reform and Consumer Protection Act has been endorsed by the AARP, Consumer Federation of America, Consumers Union, Council of Institutional Investors, National Fair Housing Alliance, National Restaurant Association, Public Citizen, SEIU, and US PIRG, among other organizations.
 
Summary of the bill:
 
Consumer Financial Protection Bureau
·     Strong Independence: Led by an independent director appointed by the President and confirmed by the Senate, with a dedicated budget in the Federal Reserve, the Bureau will be able to autonomously write rules for consumer protections governing all financial institutions – banks and non-banks – offering consumer financial services or products and oversee the enforcement of federal laws intended to ensure the fair, equitable and nondiscriminatory access to credit for individuals and communities. This could range from requiring new easy-to-read mortgage loans to capping credit card interest rates.
 
·     Covers Range of Financial Products:  This applies to banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators), payday lenders, and student lenders as well as other non-bank financial companies that are large, such as debt collectors and consumer reporting agencies. Banks and Credit Unions with assets of $10 billion or less will be examined for consumer complaints by the appropriate regulator.
 
·      Able to Act Fast:  With this Bureau on the lookout for bad deals and schemes, consumers won’t have to wait for Congress to pass a law to be protected from abusive anti-consumer practices.

·      Consumer Hotline: Creates a national consumer complaint hotline so consumers will have, for the first time, a single toll-free number to report problems with financial products and services.

·     Accountability: Makes this one office accountable for consumer protections.  With many agencies sharing that responsibility now, it’s hard to know who is responsible for what, and easy for emerging problems that haven’t historically fallen under anyone’s purview to fall through the cracks

CREDIT SCORE PROTECTION
 
·      Monitor Personal Financial Rating: Allows consumers free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision. Gives consumers access to credit score disclosures as part of an adverse action and risk-based pricing notice.

MORTGAGE REFORM



·     Require Lenders Ensure a Borrower's Ability to Repay: Establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.
 
·     Require Additional Disclosures for Consumers on Mortgages: Lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.
 
·     Prohibit Unfair Lending Practices: Prohibits the financial incentives for subprime loans that encourage lenders to steer borrowers into more costly loans, including the bonuses known as "yield spread premiums" that lenders pay to brokers to inflate the cost of loans.  Prohibits pre-payment penalties that trapped so many borrowers into unaffordable loans.

INVESTOR PROTECTIONS
 
·     Fiduciary Duty: Gives SEC the authority to impose a fiduciary duty on brokers who give investment advice.  The advice must be in the best interest of their customers.