Are you any better off now than before new financial regulations became law? When it was signed into law, Dodd-Frank drew a line in the sand on mortgage abuses, predatory lending, credit information and other vital issues for consumers. But since then, the dozen-plus regulators writing the rules under the new FinReg law have struggled to work out most of the specifics. The law sets more than 240 deadlines for 22 different regulators to write rules, issue recommendations and write reports in the implementation of Dodd-Frank. Most deadlines must be met by only 10 regulators.
"In one sense, everything's different because financial institutions know what's coming, so they're already anticipating and making business changes," says Margaret Tahyar, a partner at Davis Polk & Wardwell, a New York law firm tracking Dodd-Frank for its clients. "In another sense, there's still a great deal of uncertainty."
As for the handful of rules that have been written, here is a closer look at the financial regulations that have been implemented and how they affect you.
A new consumer watchdog
The Dodd-Frank Act created a new federal agency to protect consumers who use a range of financial products. The agency is financed out of the federal budget. FinReg advocates hail that as an important development because the regulator won't be as beholden to the private sector as other agencies that rely on institutions they regulate for their budget.
On July 21, the Consumer Financial Protection Bureau received responsibility for enforcing laws meant to regulate consumer finance in the following areas:
- Fair credit. It governs consumers' rights to their credit information and how the data are used or disseminated.
- Truth in lending. It requires lenders to clearly disclose costs and fees associated with credit, and it provides a method for resolving disputes.
- Mortgage origination. Mortgages were a key cause of the financial crisis because of lax underwriting standards, predatory lending and abusive practices.
- Marketing of financial products to prevent deception and abuse.
Previously, seven different agencies -- sometimes seen as too cozy with industry -- oversaw the three dozen laws that Dodd-Frank replaces. Elizabeth Warren -- the White House adviser who as an academic championed the creation of a consumer bureau -- has led the agency in simplifying mortgage disclosures, creating a database of consumer complaints and offering financial education to consumers.
Obama has nominated former Ohio Attorney General Richard Cordray as director of the bureau, setting up a fierce battle with Republicans in Congress who have vowed to block any nominee unless the agency's power is curbed. Obama has the power to appoint Cordray as interim director during a congressional recess, but lawmakers have avoided going into recess.
Under FinReg, unless the bureau has a director, it cannot assume its full rule-writing powers for new financial regulations and must rely on examining the operations of lenders and bringing enforcement actions to curb abusive practices and protect consumers, according to a legal interpretation by inspectors general for the Federal Reserve and Treasury.
One way the bureau is already cracking down is by partnering with state regulators and the military to protect members of the armed service and their families from abuses involving mortgages, student loans and payday lending.
The bureau's website displays samples of simplified mortgage statements and consumer information on topics such as international money transfers and credit scores, and it invites consumers to comment on its proposals involving new financial regulations.