President Barack Obama signed sweeping financial reform legislation into law July 21. The legislation, which is the most far-reaching overhaul of financial rules since the Great Depression, aims to provide greater protection to consumers, and reduce the risky practices at financial institutions that led to the financial crisis. Obama proposed the legislation a year ago, and supporters battled heavy opposition from Wall Street and nearly all congressional Republicans to push it into law. One of the key provisions of the legislation, called the Dodd-Frank Wall Street Reform and Consumer Protection Act, is the creation of a Bureau of Consumer Financial Protection which will have broad authority to write new rules for mortgages, credit cards, payday loans and other consumer products and make sure firms are adhering to them. The legislation also gives new powers to government regulators to break apart large financial institutions that threaten the economy, and reins in banks’ ability to trade in risky financial instruments. It also regulates credit and debit card fees – limiting banks’ ability to charge retailers high fees to process credit and debit transactions – mandates that lenders verify that borrowers can repay loans, regulates rate hikes and overdraft fees applied to consumers, and mandates clarification of college loan obligations and the risks of investment products.
