Today House and Senate conferees again met on the bill to bring accountability to Wall Street.

The bill creates a new consumer financial protection watchdog, ends too big to fail bailouts, sets up an early warning system to predict and prevent the next crisis, and brings transparency and accountability to exotic instruments such as derivatives.

A list of House and Senate offers and counter offers can be found by clicking here.

Below is a list of significant issues to be considered today.

TITLE X: STRONG CONSUMER FINANCIAL PROTECTION WATCHDOG

• Independent Head: Led by an independent director appointed by the President and confirmed by the Senate.  

• Independent Budget: Dedicated budget paid by the Federal Reserve Board.
  Independent Rule Writing: Able to autonomously write rules for consumer protections governing all entities – banks and non-banks – offering consumer financial services or products.   

• Examination and Enforcement: Authority to examine and enforce regulations for banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators) and large non-bank financial companies, such as large payday lenders, debt collectors, and consumer reporting agencies.  Banks with assets of $10 billion or less will be examined  by the appropriate bank regulator.  

• Consumer Protections: Consolidates and strengthens consumer protection responsibilities currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development, and Federal Trade Commission. 

• Able to Act Fast:  With this Bureau on the lookout for bad deals and schemes, consumers won’t have to wait for Congress to pass a law to be protected from bad business practices. 

• Educates: Creates a new Office of Financial Literacy. 

• Consumer Hotline: Creates a national consumer complaint hotline so consumers will have, for the first time, a single toll-free number to report problems with financial products and services. 

• Accountability: Makes one office accountable for consumer protections.  With many agencies sharing responsibility, it’s hard to know who is responsible for what, and easy for emerging problems that haven’t historically fallen under anyone’s purview, to fall through the cracks.  

• Works with Bank Regulators: Coordinates with other regulators when examining banks to prevent undue regulatory burden.  Consults with regulators before a proposal is issued and regulators could appeal regulations they believe would put the safety and soundness of the banking system or the stability of the financial system at risk. 

• Clearly Defined Oversight:  Protects small business from unintentionally being regulated by the CFPB, excluding businesses that meet certain standards. 

INTERCHANGE FEES

• Protects Small Businesses from Unreasonable Fees: Requires Federal Reserve to issue rules to ensure that fees charged to merchants by credit card companies for credit or debit card transactions are reasonable and proportional to the cost of processing those transactions.

CREDIT SCORE PROTECTION

• Monitor Personal Financial Rating: Allows consumers free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision.

Title IX(d): REDUCING RISKS POSED BY SECURITIES

• Skin in the Game: Requires companies that sell products like mortgage-backed securities to retain at least 5% of the credit risk, unless the underlying loans meet standards that reduce riskiness.  That way if the investment doesn’t pan out, the company that packaged and sold the investment would lose out right along with the people they sold it to.   

• Better Disclosure: Requires issuers to disclose more information about the underlying assets and to analyze the quality of the underlying assets. 

TITLE XIV: MORTGAGE REFORM

• Require Lenders Ensure a Borrower's Ability to Repay: Establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.  

• Prohibit Unfair Lending Practices: Prohibits the financial incentives for subprime loans that encourage lenders to steer borrowers into more costly loans, including the bonuses known as "yield spread premiums" that lenders pay to brokers to inflate the cost of loans.  

• Penalties for Irresponsible Lending: Lenders and mortgage brokers who don’t comply with new standards will be held accountable by consumers for as high as three-year’s interest payments and damages plus attorney’s fees (if any).  Protects borrowers against foreclosure for violations of these standards. 

• Expands Consumer Protections for High-Cost Mortgages: Expands the protections available under federal rules on high-cost loans -- lowering the interest rate and the points and fee triggers that define high cost loans.  

• Additional Disclosures for Consumers on Mortgages: Lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.

• Housing Counseling: Establishes an Office of Housing Counseling within HUD to boost homeownership and rental housing counseling.

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