Posts Tagged ‘senate’

Financial Reform Passes: What Does It Mean For The Average Consumer?

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So the Senate voted today to pass financial reform, a bill aimed chiefly at reining in Wall Street from doing the kinds of things that lead to the financial collapse of 2008. There has been a lot of talk about derivatives  and credit default swaps, and while these are important parts of the reform bill, which ultimately affect each and every one of us, there are other aspects of this bill that will more directly affect average Americans.

The largest of these is the creation of a new consumer watchdog agency known as the Consumer Financial Protection Bureau. This agency will be located within the Federal Reserve but will be completely independent from it. It will have an independent director and will have the authority to make and enforce rules against unfair and deceptive consumer credit practices. This agency will regulate the practices any business that engages in consumer lending, from credit card companies and mortgage lenders to payday loan companies. The one group exempted from CFPB authority are auto dealers.

Basically, what the CFPB will do is make sure that when you sign a credit card agreement, you know exactly what you’re getting into. Even more importantly, it will ensure that if you borrow money, you can do it safely and with the knowledge that you can pay it back without going broke. Hopefully, the CFPB will put an end to the usurious practices of payday lenders, for example.

Finally, the reform bill contains new regulations with respect to mortgage lending.  Lenders will no longer be allowed to pay brokers additional fees for steering borrowers into riskier and more expensive loans if they qualify for cheaper safer ones. It also forces lenders to adopt stricter underwriting standards to ensure that no one receives a loan they can’t afford to repay and it reduces abusive repayment terms like huge prepayment penalties and other “junk” fees.

While the reform bill isn’t as strong as many would like, it does have some good aspects that will help consumers better manage their debt. I hope that Elizabeth Warren is appointed to be the director of the CFPB. 

I’m curious….what do YOU think about the financial reform bill?

More Foreclosure Assistance Provided In Financial Reform Bill

As the financial reform bill continues to make its way through Congress, at least one measure has been hammered out: a plan to combat mortgage foreclosures styled after the Pennsylvania HEMAP program has been approved by both the House and Senate.  I wrote about the HEMAP program in an earlier blog post.

The plan, called HEMA, would take $3 billion from unused TARP funds to provide assistance to homeowners in financial distress.  HEMA will require servicers and lenders to inform homeowners of the program availability before starting the foreclosure process.

If the homeowner is accepted into the program, he or she would make a small payment, based on what is affordable to the HUD and HUD would remit the full payment to the homeowner’s servicer. Payments would continue until the homeowner’s financial problems were resolved, whereupon he or she would resume making the full mortgage payment to the servicer and would also need to repay HUD for the payments advanced.

It is unclear how closely the HEMA program mirrors the HEMAP program, but if it is fairly close, any repayment of advanced monies would be over a long term period of time and capped at a level that is affordable for the homeowner.

The inclusion of a foreclosure assistance program within the financial reform bill is welcome news. Unlike HAMP, the HEMA program will carry the full force of law, which means that servicers and lenders can be forced to comply.

Senator Sanders’ Amendment To Audit The Fed Passed Unanimously 96-0

 

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In  a rare show of complete bipartisanship, the Senate today voted unanimously,  96-0, to approve an audit of the Federal Reserve.  The audit would be limited to Federal Reserve activity that took place from the beginning of the financial crisis in December of 2007 until the time the law is enacted. In addition, the Fed would be required to disclose the recipients of the more than $2 trillion dollars in emergency aid funding since that time. The list of recipients will be available on the Fed’s website beginning on December 1st 2010. The GAO will also look into whether or not there were any conflicts of interest involved in any of these financial deals granted during the review time period.

Today’s vote was on an amendment, proposed by Senator Bernard Sanders,  to the larger financial reform bill currently being worked on by both houses of Congress.  Originally, the measure had stronger language that would have required an on-going audit of the Fed, but faced with bipartisan opposition in the Senate as well as opposition from the White House and from Federal Reserve Chairman Bernake himself, the scope of the audit was scaled back to a one time occurrence.  In addition, the names of the recipients of the two trillion dollar emergency aid would not have to be published on the Fed’s website until December 1, 2010 instead of within 30 days of its enactment.

While this is good news, it is important to remember that this vote was only on an amendment to the larger financial reform bill, which is still has a long way to go before it passes, after which, it must be signed by President Obama in order to become law.

Too Big To Fail Failed In The Senate 61-33

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Well, there can no longer be any doubts that the Senate is firmly in the pockets of the big banks. Once again, they’ve proven completely unwilling to do what good governance and the lessons of history suggest they must.

Today an amendment to the financial reform bill, sponsored by Senators Sherrod Brown of Ohio and Ted Kaufman of Delaware that would have required the big banks to be broken down into smaller and more manageable institutions failed by a vote of 61 to 33.

Not that I really thought ending “too big to fail” had a chance, but I thought the vote would be narrower than that. There are way too many senators who are responding to the wishes of their campaign donors and not to the needs of their constituents.

Unemployment Extension Passed Both Houses and Signed by President

The millions of Americans who are depending upon their unemployment checks to pay their bills and put food on the table can rest easier today. A 60 day extension to the time to file for extended benefits in any of the four tiers of benefits available has passed in Congress and has been signed into law by President Obama.

While no additional weeks have been added, this extension would allow anyone who has exhausted a particular tier to move on to the next tier of benefits. The deadline to file is now June 2, and it applies retroactively to April 5th, so any missed benefits will be paid.

Senate Passes 30 Day Unemployment Benefit Extension

With the help of Republican Senator George Voinovich of Ohio, the Senate today passed an amendment that would extend  the EUC program for another thirty days.

Because days were added to the original extension that had already passed by the House,  it now needs to go back to the House for approval there.  Had days not been added, the current extension would be effective for only two weeks.

In the meantime, more and more unemployed Americans are losing their benefits. A longer extension, through the end of the year, is under consideration. Both houses of Congress have passed bills containing an unemployment benefit extension through the end of this year, but have not yet reconciled the two versions of the bills.

200,000 Americans May Lose Unemployment Benefits This Week

Since the Senate failed to pass even a one month extension on Extended Unemployment Compensation (EUC) before adjourning for the Spring recess, over 200,000 people could run out of the unemployment benefits they’re relying on to make ends meet until they find work.

What is sad is that it doesn’t appear that either side, Democrat, or Republican, is against extending the EUC program. The argument is about how it should be paid for. Republicans want it paid by drawing on previously committed stimulus funds. They say that not doing so will grow the deficit and that this is unacceptable.  Democrats argue that doing so would negate the stimulating effect, since it would take away money from another part of the stimulus package.

To be fair to the Democrats, the Republicans did not care much about the deficit when they unanimously voted to pass President Bush’s tax cuts, which were not paid for at all, nor were they concerned about the deficit when they voted to continue funding the wars in Iraq and Afghanistan, which were also not paid for.  Why they should be so concerned about the deficit now, and over a $9 billion dollar expenditure, which is a drop in the bucket compared to those other things, is baffling.

Congressman Barney Frank Optimistic About Financial Reform Bill

Congressman Barney Frank, chairman of the House of Representatives Financial Services Committee believes that Congress can deliver a bill for the president’s signature on financial reform at the end of May.

This is despite Republican senator Corker’s statements yesterday that he would not be voting for the bill in its current form. To refresh your memory, he thinks that the current bill offers consumers too much protection from the banks. 

Right now,  the bill is under consideration by the Senate, which must pass its own version before the two versions are reconciled between both houses of the legislature.

Is Congressman Frank right? I guess we’ll see at the end of May.

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