Wall Street Reform passes Congress

Thu, July 15, 2010

Washington, D.C. -- U.S. Senator Daniel K. Akaka (D-Hawaii) voted to support Wall Street reform today.  The Senate approved the bill this afternoon by a final vote of 60-39.  The House passed the bill last month and it now awaits the President's signature into law. 

"This bill will improve the lives of working families in Hawaii and across the nation," said Senator Akaka.

Akaka delivered a speech on the Senate floor this morning in support of the legislation.  The full text is available here: LINK

Akaka participated in a press conference this afternoon highlighting the consumer protection provisions in the bill.

Senator Akaka is a member of the Committee on Banking, Housing and Urban Affairs.  He added a number of provisions to the legislation that educate, protect and empower consumers and investors:


CONSUMER PROTECTION

Remittances
Immigrants often send substantial portions of their earnings to family members living abroad.  They frequently use unregulated financial institutions which overcharge or sometimes fail to deliver the money.

Senator Akaka's provision will modify the Electronic Fund Transfer Act to establish remittance consumer protections.  It will require simple disclosures about the costs of sending remittances to be provided to the consumer prior to and after the transaction.  A complaint and error resolution processes for remittance transactions would be established by the legislation.  The Federal Reserve System would be required by the legislation to work on expanding the use of the automated clearinghouse system for remittance transfers to foreign countries, focusing on countries that receive the largest amount of remittances.

"In Hawaii, many people send money to family members living in the Philippines and other Pacific nations," said Senator Akaka.  "Many are often overcharged, and sometimes their hard-earned money never reaches their loved ones.  Currently, remittances are not regulated under federal law.  My provision establishes basic protections and a complaint and error resolution process for remittance transactions. Companies will need to be straightforward about fees and other charges."

Increasing Access to Mainstream Financial Institutions
About one in four families in the United States are unbanked or underbanked.  Senator Akaka and Senator Herb Kohl (D-Wisconsin) included a provision to increase access to mainstream financial institutions for low and moderate income families that cannot afford to have their earnings diminished by reliance on high-cost and often predatory financial services.

The amendment will authorize programs intended to assist low- and moderate-income individuals establish bank or credit union accounts.  It will encourage the development of small, affordable loans as an alternative to more costly payday loans.  It will enable community development financial institutions to establish and maintain small dollar loan programs.

"Growing up in Pauoa Valley, my family had limited means and like many Americans, we did not have a bank account," said Senator Akaka.  "My parents kept their money in a box divided into different sections so that money could be separated for various purposes. Obviously, money in the box was not earning interest. It was not secure. Without a bank or credit union account, families are unable to save for education expenses, home down payments, and other needs.  Banks and credit unions provide opportunities for savings and borrowing that improve the lives of working families."

Office of Financial Literacy
The legislation creates a new Consumer Financial Protection Bureau.  Senator Akaka had included in bill a provision that creates an Office of Financial Literacy within the Bureau.  This office will develop and implement initiatives intended to educate and empower consumers and develop a strategy to improve the financial literacy among consumers.


INVESTOR PROTECTION

Investor Advocate
Senator Akaka inserted a provision to create an office of the Investor Advocate within the Securities and Exchange Commission (SEC) to ensure that the interests of retail investors are better represented.  The Investor Advocate will:

• Help retail investors resolve significant problems with the SEC or self-regulatory organizations (SRO).
• Identify areas where investors would benefit from changes in Commission or SRO policies.
• Identify problems that investors have with financial service providers and investment products. Recommend policy changes to the Commission and Congress in the interests of investors.

Timely Disclosures for Financial Products and Services
Senator Akaka had language included in the bill which clarifies that the SEC has the authority to effectively require disclosures prior to the sale of financial products and services.

"Investors must be provided with the relevant, meaningful, and timely disclosures they need to make informed investment decisions," Senator Akaka noted.

Investor Financial Literacy Strategy
The SEC will be required to develop an investor financial literacy strategy intended to bring about positive behavioral change in investors.  The Government Accountability Office will also conduct a study on mutual fund advertising to further examine recommendations intended to improve investor protections and ensure that investors can make sound financial decisions when purchasing mutual fund shares.