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A New Regulatory Agency for Consumers

The Senate Banking Committee just released a financial reform bill in the hopes it will help Americans avoid another financial recession. One of the more interesting provisions of the bill is the implementation of a Consumer financial Protection Bureau. This proposed agency will create rules and regulations for financial entities - bank accounts, home loans, and more.

Current financial regulatory agencies are more favorable to the industry say supporters of the new bill. Bankers staff the current agencies along with other people employed employed in the world of finance. Consumers do not see current regulatory agencies as favoring the little guy. They have no confidence people entrenched in the financial industry will work to help them deal with predatory lenders, search for the best interest rates, or advise them in other matters.


The new bureau is poised to promote and protect the simplicity of consumer transactions and consumer products. Rules and regulations are to be clear and understandable - no tricks and no loopholes. 'Transparency' is the buzzword for the agency. Consumers will be in the lead and have the option to compare products such as loans or credit cards. The goal is to let consumers manage their own risks.

The financial industry is quickly working to kill the bill saying it will lead to fewer innovative ideas.

No American wants to spend unnecessary tax dollars funding yet another Washington agency. However, borrowers with excellent credit history are finding themselves suffering because of others who have defaulted on interest-only, adjustable rate, balloon home loans and then defaulted. This ruined home values across the country and everyone, with good or poor credit, ended up paying.

The new agency does not seek to place the blame on anyone. Maybe a person took on a loan they could afford. Possibly a person was tricked into a shady loan or mortgage deal. The goal is to create new standards and reform the industry.

Many supporters of the new bill feel congress is owned by the financial industry. Banks and other organizations spend millions of dollars for policy change approvals. The recent Credit Card Act that included the new regulations on consumer debt and credit that were implemented earlier this year was ushered into congress with over $270,000 in campaign contributions.

Until the new agency is created consumers can utilize common sense to get a hold on consumer debt. First, live within your means. This is very important as the country comes out of a recession. A 2009 report from FINRA Foundation explains that one quarter of those responding had overdrawn their checking accounts. This adds up to overdraft fees with the bank and bad check fees with company. Too much of this and it is easy to see how recessions get started.

Secondly, do not be financially unaware. The same report stated that one half of the respondents felt they were 'on top of the game' when it came to financial matters. Unfortunately, one quarter of these responders had behaviors that resulted in high overdraft fees, high ATM fees, late payments, and other high cost mistakes.

The Consumer Financial Protection Bureau is set to become your ally in the realm of consumer debt. Remember, you are your best advocate!