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American Trust: Wall Street Reform and Consumer Protection Act

consumer financial protection bureau

America paid too high of a price for the greedy behavior of Wall Street. Eight years of Wall Street pursuing short-term profits - at any cost - was largely responsible for the eight million jobs and $17 trillion in retirement savings and personal investments Americans have lost.

This is far too steep a price to pay for Wall Street's misdeeds.

Throughout the recent financial crisis, the various institutions that make up the financial world have all been hit in one way or another for not being there for their customers. It’'s no surprise then that very few Americans (between 2% and 5%) say they find statements completely believable if made by a spokesperson for one of these types of companies.

Will the new Wall Street Reform Act help American’s regain lost trust?

Highlights of the New Reform Bill

Consumer Protections with Authority and Independence:

Creates a new independent watchdog, housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.

Ends Too Big to Fail Bailouts:

Ends the possibility that taxpayers will be asked to write a check to bail out financial firms that threaten the economy by: creating a safe way to liquidate failed financial firms imposing tough new capital and leverage requirements that make it undesirable to get too big; updating the Fed’s authority to allow system-wide support but no longer prop up individual firms; and establishing rigorous standards and supervision to protect the economy and American consumers, investors and businesses.

Advance Warning System:

Creates a council to identify and address systemic risks posed by large, complex companies, products, and activities before they threaten the stability of the economy.

Transparency & Accountability for Exotic Instruments:

Eliminates loopholes that allow risky and abusive practices to go on unnoticed and unregulated - including loopholes for over-the-counter derivatives, asset- backed securities, hedge funds, mortgage brokers and payday lenders.

Federal Bank Supervision:

Streamlines bank supervision to create clarity and accountability. Protects the dual banking system that supports community banks.

Executive Compensation and Corporate Governance:

Provides shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation.

Protects Investors:

Provides tough new rules for transparency and accountability for credit rating agencies to protect investors and businesses.

Enforces Regulations on the Books:

Strengthens oversight and empowers regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefit special interests at the expense of American families and businesses.

Strong Consumer Financial Protection Watchdog

The new independent Consumer Financial Protection Bureau will have the sole job of protecting American consumers from unfair, deceptive and abusive financial products and practices and will ensure people get the clear information they need on loans and other financial products from credit card companies, mortgage brokers, banks and others.

American consumers already have protections against faulty appliances, contaminated food, and dangerous toys. With the creation of the Consumer Financial Protection Bureau, they’ll finally have a watchdog to oversee financial products, giving Americans confidence that there is a system in place that works for them – not just big banks on Wall Street.

Why Change Is Needed: The economic crisis was driven by an across-the-board failure to protect consumers. When no single office has consumer protections as its top priority, consumer protections don’t get the attention they need. The result has been unfair and deceptive practices being allowed to spread unchallenged, nearly bringing down the entire financial system.

The Consumer Financial Protection Bureau

Independent Head:

Led by an independent director appointed by the President and confirmed by the Senate.

Independent Budget:

Dedicated budget paid by the Federal Reserve Board.

Independent Rule Writing:

Able to autonomously write rules for consumer protections governing all entities – banks and non-banks – offering consumer financial services or products.

Examination and Enforcement:

Authority to examine and enforce regulations for banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators) and large non-bank financial companies, such as large payday lenders, debt collectors, and consumer reporting agencies. The appropriate bank regulator will examine Banks with assets of $10 billion or less.

Consumer Protections:

Consolidates and strengthens consumer protection responsibilities currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development, and Federal Trade Commission.

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 bad business practices.

Educates:

Creates a new Office of Financial Literacy.

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 one office accountable for consumer protections. With many agencies sharing responsibility, 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.

Works with Bank Regulators:

Coordinates with other regulators when examining banks to prevent undue regulatory burden. Consults with regulators before a proposal is issued and regulators could appeal regulations they believe would put the safety and soundness of the banking system or the stability of the financial system at risk.

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