The Senate approved a massive financial reform program yesterday. Major changes are in the works. Over 2,000 pages spell out the new law of the land, but what does it mean to you?
For most of us, not much.
The most dramatic changes will happen behind the scenes, and consumers won't see anything new for a while. In fact, we're not even sure what will happen with these new regulations - final rules are not yet out yet, and nobody is able to imagine all the changes over the horizon. It will be a few years at least before we get a handle on things.
You can expect a few changes related to bank accounts:
- FDIC insurance was permanently raised to $250,000 per depositor, and the increased limit will be retroactive to 2008
- Retailers can set dollar limits on credit card transactions (minimum and maximum)
- Merchants may offer discounts to customers who pay with debit cards or use other methods to limit swipe fees
- "Liar loans" - loans made with little or no proof of income and assets - will be a thing of the past, as lenders must verify that you can repay mortgage loans
In addition, there will be a new Bureau of Consumer Financial Protection. This group will watch over consumer products such as loans, credit cards, bank accounts. Their charge is to make products easier to understand, and to reduce abusive practices. In the coming years, you'll likely see more disclosure and products that are less complex.
Is everything all better now? Nobody seems to think the bill is perfect. Some say it didn't go far enough to protect consumers and reign in financial institutions. Others argue that the bill allows too much "discretion" and that consumers will ultimately lose due to higher prices and less choice. Only time will tell.
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