Washington, DC — The U.S. House of Representatives today passed the financial reform bill, which includes the creation of a Bureau of Consumer Financial Protection. The new Bureau would oversee consumer financial products such as mortgages, credit cards, and payday loans. The bill will now move to the Senate for a vote.
 
Consumers Union, the nonprofit publisher of Consumer Reports magazine, has been a strong, outspoken advocate for the creation of this bureau to help protect and inform consumers in the financial marketplace.

“The new consumer bureau is a watchdog for people who have been hit time and time again with everything from punishing credit-card fees to complicated mortgage agreements,” said Gail Hillebrand, Director of Consumers Union’s Defend Your Dollars campaign (www.DefendYourDollars.org). “The bill couldn’t come at a better time for consumers who are trying to dig their way out of the recession.”

“For consumers who are drowning in debt and overwhelmed by high interest rates, penalties and fees, this bill is a lifeline,” said Pamela Banks, senior policy counsel for Consumers Union. “Consumers finally have a consumer bureau that will be on their side.”

The new bureau will be housed in the Federal Reserve, and will have an independent director with reliable funding and full rulemaking authority over a broad range of financial products.

The overall bill would set up a warning system to minimize financial disruptions, require large financial institutions to liquidate rather than be bailed out by taxpayers, and set new rules for financial procedures and instruments, such as derivatives, that have been largely unregulated.  An Office of Credit Ratings will also be established to promote accurate credit ratings and ensure these ratings are not unfairly influenced by conflicts of interest, and the bill allows investors to sue credit agencies.

In addition to the consumer In addition to the consumer bureau, the bill contains several other benefits for consumers:

• All consumers will be able to get free credit scores when they are denied credit or charged a higher price for credit because of information in their credit reports.
• The bill puts an end to prepayment penalties for mortgages. Mortgage lenders must determine whether a borrower has the ability repay the loan.
• The Federal Trade Commission (FTC) can develop and enforce new rules without special procedural barriers to those rules to protect consumers from unfair and abusive auto financing transactions.
• The consumer bureau may prohibit or impose conditions or limitations on the use of arbitration.
• The bill contains tough language that brings the derivative market out of the shadows and on to public exchanges.