President Obama signed into law a historic Wall Street reform legislation, which the NAACP and other civil rights groups have supported and helped develop for over a year. The new law is expected to help protect consumers from predatory mortgage loans and other unscrupulous financial products that strip them of their hard-earned wealth.
A key plunk of the Restoring American Financial Stability Act of 2010 is an independent consumer financial protection bureau located in the Federal Reserve that would oversee how consumers are impacted by home mortgages and financial services areas.
The bureau is expected to be a watchdog and would have the power to write and enforce new rules governing mortgages, payday lending and other financial products. It would that ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards and other financial products. It would also protect them from hidden fees, abusive terms and deceptive practices.
The legislation will also have an Office of Fair Lending, whose primary focus would be to develop and implement fair rules so that consumers will not face racial discrimination by predatory lenders or other unscrupulous financial servicers when they try to purchase a home, buy a car or obtain a credit card.
The legislation will also provide assistance for families and communities affected by the foreclosure crisis, including at least $1 billion in bridge loans to help families hold on to their homes while they search for a job. It includes comprehensive mortgage reform and anti-predatory lending measures essential to combating the abusive lending practices that ushered in the economic crisis.
The Federal Reserve would also be allowed to set “reasonable and proportional” fees for bank and debit card transactions based solely on the cost incurred by the issuer, and will only allow rate adjustments to recover fraud prevention costs if the issuer is in compliance with established rules and can demonstrate that the incremental increase would go towards fraud prevention only. However, the law exempts from this rule state-issued debit and prepared cards, including those issued under federal nutrition programs.
“This is just one step toward pulling America back together, and protecting our families’ hard-earned wealth and savings,” stated NAACP President and CEO Benjamin Todd Jealous. “The NAACP will continue to work tirelessly to ensure Congress and the president now focus on its implementation.”
He added, “For far too long, the responsibility for regulating financial services was put in the hands of agencies whose primary responsibility was to respect the solvency of the financial services industry and make millions of dollars on the backs of every day Americans. These sweeping reforms are monumental steps in actually providing protection for Americans throughout our country, and eliminating corporate abuse of consumers.”