What is the Restoring American Financial Stability Act of 2010 and How Will It Affect Consumers?

“Resolved, That the bill from the House of Representatives (H.R. 4173) entitled ‘An Act to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes,’ do pass with the following …”

That is how the bill known as H.R. 4173 begins. It was introduced into—and passed—the House last year as the Wall Street Reform and Consumer Protection Act of 2009 and, in its latest incarnation in the Senate, is known as the Restoring American Financial Stability Act of 2010.

Designed to end predatory lending, close regulatory gaps, and overhaul questionable financial practices that ultimately led to a worldwide financial meltdown, the bill introduces sweeping new changes for both consumers and financial institutions. Passed in the House, and expected to pass in the Senate, what will it all mean to you, the consumer?

For one thing, a new Consumer Financial Protection Agency will be established. Its job will be regulatory, intended to regulate consumer home mortgages, car loans, and credit cards. (Automobile dealerships won a concession in Congress and will be exempt from this oversight agency.)

States will have the ability to promulgate strict state-specific consumer-protection laws on national banks, and state attorneys general will be able to enforce certain rules issued by the above-mentioned Consumer Financial Protection Agency.

Additionally, the Federal Treasury Department will expand its authority to place non-bank financial firms, like insurance companies into receivership, regulate the over-the-counter derivatives market, and more. In the event that a firm’s collapse threatens to destabilize the economy, the federal government will have the power to seize such firms without taxpayer bailout. The Treasury Department will also have a new Federal Insurance Office charged with monitoring the insurance industry within its purview.

Another change includes the establishment of  a new 10-member Financial Stability Oversight Council shall be created and charged with addressing risks to the nation’s financial stability.

The amount of Federal Deposit Insurance will increase to $250,000 and shall be considered retroactive to January 1, 2008. Banks will be required to have more capital, thereby making them less profitable and, as a result, unable to make as many consumer loans.

The Securities and Exchange Commission (SEC) will have expanded authority to monitor broker dealers who give investment advice, and both hedge and private-equity funds will have to register with the SEC as advisors. They will be required to provide trading information as well in an effort to keep track of system-wide risks.

After passing in both the Senate and House, albeit in different versions, a conference committee will now be created to iron out those. Once each chamber approves those reconciliations, it is expected to be on its way to the President for his signature, thereby becoming official law.

To read a text of all five versions of H.R. 4173  visit The Library of Congress.

Or, individually:

1 . The Wall Street Reform and Consumer Protection Act of 2009 (Introduced in House – IH)[H.R.4173.IH][PDF] 2 . Wall Street Reform and Consumer Protection Act of 2009 (Engrossed in House [Passed House] – EH)[H.R.4173.EH][PDF] 3 . Wall Street Reform and Consumer Protection Act of 2009 (Referred in Senate – RFS)[H.R.4173.RFS][PDF] 4 . Restoring American Financial Stability Act of 2010 (Engrossed Amendment Senate – EAS)[H.R.4173.EAS][PDF] 5 . Restoring American Financial Stability Act of 2010 (Public Print – PP)[H.R.4173.PP][PDF]

You can track the bill’s progress as it makes its expected way into existing law here.

By Identity theft secrets, guest writer, Sami K. Hartsfield, ACP,  who is a paralegal in Houston with experience in commercial litigation and tax law. She holds a degree in paralegal studies and a Bachelor of Science degree in political science. After interning with Texas’ 14th Court of Appeals under Chief Justice Adele Hedges and completing the University of Houston Law Center’s Summer 2008 Prelaw Institute, she is preparing to enter law school this fall. Sami holds a national advanced paralegal certification, and four specialty certifications: Discovery; Trial Practice; Contracts Management; and Social Security Disability Law.  More helpful tax information can be found at her  National Tax Law Examiner page.