08/24/2010
Stinson Partner Barkley Clark co-authored a Special Report for Clarks' Bank Deposits and Payments Monthly entitled "Historic Wall Street Reform and Consumer Protection Act Changes the Banking Industry."
On July 21, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. As the President said at the signing ceremony, "Over the past two years, we have faced the worst recession since the Great Depression." The government responded to the Great Depression with a wave of financial reform legislation; the breakdown of the financial system in 2008 has been the catalyst for a second wave. History repeats itself. The scope of the Dodd-Frank Act is enormous and impacts every segment of our financial system.
This special report focuses on the consumer protection components of the Act. They create a Consumer Financial Protection Bureau. The new federal watchdog has "just one job, which is to look out for people as they interact with the federal government," the President emphasized. The statute establishes a framework for consumer protection on the federal level. Dodd-Frank adds another layer to the existing supervisory and enforcement powers of the prudential regulators. Consumer protection joins safety and soundness as a guiding principle for federal regulation.
What does the law say? What are the legal issues and their implications for the financial services industry? The arena now shifts from Congress to the federal regulators. Dodd-Frank creates the "strongest consumer protections in the nation's history." Whether the President's proclamation proves true will depend on how the Consumer Financial Protection Bureau crafts the rules, and how they are enforced. In a similar manner, the Fed and the rest of the federal banking regulators will now turn their attention to the regulatory arena in many areas other than consumer protection.
Here is a first look at consumer protection under financial reform. It is going to take years to figure it all out. For more information on the Dodd-Frank Act, read the complete article.
You may also view a recent alert by Stinson attorney Katie Rizzo, or contact any of our Banking & Financial Services attorneys.
As published in the July 2010 issue of Clarks' Bank Deposits and Payments Monthly. Published by A.S.Pratt & Sons. Copyright © 2010, ALEX eSOLUTIONS, INC. Posted with permission.
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