A hotly debated financial reform bill has passed the US Senate and very little (except some process) remains until a unified bill is slid under President Obama’s signatory pen.
Discussion now shifts from debate on financial reform to understanding what financial reform has reformed and its impact on us, the consumer. For good or for ill, dramatic changes in our financial sector will occur.
I’ll do my best to summarize the likely changes you can expect to see in this space:
- Stores will be able to set across the board minimum spending limits in order for you to be able to use your credit card.
- Stores can offer discounts for say, using cash, or lower fee (to them) cards.
- You will now find it easier to prepay your mortgage. If you have a balloon payment or are underwater, you will be allowed to prepay. If you have a traditional product, the prepayment penalty for early payoff can only apply in the first 3 years, otherwise you’re scott free
- You MUST receive a credit score if your credit score is a reason why your offer / job / application is rejected (this particularly applies to renting a home).
Of course there are many other provisions, but since the House and Senate versions differ on these (such as the Consumer Financial Protection Agency), we really don’t know what the final product of these differing provisions will look like until the bills are combined and re-conciliated.
Overall, financial institutions will find a more regulated environment with many former money-making ventures regulated away (or highly restricted). Consumers of banking products should see lower bottom lines, but with less choice of products.
(Photo by KRSPO)