How the New Consumer Bureau Will Help You
Big changes are on the way for mortgages, personal loans, and other financial products
The new consumer financial protection bureau, which was created this summer by the bank reform bill, aims to make complex financial products easier to understand. The bureau will serve as a watchdog over credit cards, mortgages, payday loans, and other products. One goal is to avoid another subprime mortgage meltdown, which economists partially blame on people signing up for mortgages that they couldn't afford and didn't understand.
So what does this newly created bureau mean for you? Here's what you need to know:
What will this new bureau do?
It's charged with creating new rules to put an end to "abusive" financial products. The bureau, which is funded by the Federal Reserve, also has the power to enforce those rules and to improve data collection about the use of financial products, including mortgages and pricing information. The bureau has the power to ban unfair or deceptive practices, create new regulations, and enforce consumer protection laws. Likely targets include complicated mortgages, pricey loans (such as payday loans), the credit scoring system, and debt-related financial services.
How is this agency different from the consumer protection bureaus that already exist?
This is the only consumer protection bureau to focus exclusively on financial products.
Will the bureau place greater restrictions on lenders and, ultimately, reduce the amount of credit available to people?
Critics of the bill have argued that the bureau is more unnecessary government bureaucracy, and that consumers are capable of making smart decisions without hand-holding from the government. Prior to the bill's passage, business groups lobbied
Who will lead it?
The bank reform bill gave the president the authority to appoint the director of the bureau (subject to
Warren has a long history of standing up for consumers, especially middle-class workers struggling to get ahead. Before working for
In an interview with
Government policy, says Warren, is what will determine which of those two outcomes we'll see. Soon, she might be in a position to directly determine that policy.
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How the New Consumer Bureau Will Help You
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