Congress is pursuing the plan seriously.
Everyone’s eager to see if the House Financial Services Committee’s passing of a legislation that will create the Consumer Financial Protection Agency will turn out to be in line with Obama’s plan of regulating mortgages, credit cards and other forms of consumer credit. As the plan slowly makes it way to becoming a law after a 39-29 vote in the committee, President Obama’s plan is slowly gaining ground.
Here are the salient features of the bill from The Associated Press :
— The agency would oversee such common financial products as mortgages, credit cards, payday loans and terms on savings accounts.
— It would be in charge of implementing a law passed by Congress this spring that protects consumers from sudden interest rate increases on unpaid credit card balances.
— Most banks and credit unions, already monitored by other regulators for “safety and soundness,” would be spared from agency examinations. Only banks with more than $10 billion in assets would need to open their books to CFPA officials.
— While retailers would be exempt, financial institutions tied to them would not. For example, the bank that offers a store-brand credit card or the institution that provides financing through an auto dealer would still be subject to agency rules.
— The bill does not include a mandate proposed by the Obama administration that banks offer standardized, “plain vanilla” products such as a 30-year fixed mortgage, as the administration wanted.
— The bill also eliminated an administration proposal to require that banks take reasonable steps to ensure customers understand what they were buying. Democrats said the measure would be too hard to enforce.
Take it from this last feature where banks must ensure customers understand what they are buying. How can the government exactly measure such rule is followed? Would you know that your mortgage application is thoroughly explained after you meet with the lender? Definitely not and it would be a hassle on your part if you file a complaint since borrowers can just find other lenders than contend with those who shortchange them.
Some more review from our lawmakers, perhaps?