Published: August 11, 2010
NASHVILLE, Tenn. - Now that federal financial reform is in effect, Tennessee families can expect an extra layer of protection when it comes to such financial products as credit cards and mortgages.
That's the prediction of Mike Konczal, a fellow at the Roosevelt Institute, a nonprofit organization focused on consumer issues. While there has been financial industry criticism of the Restoring American Financial Stability Act for its consumer protection focus, Konczal points out that the law also helps protect that industry.
"Basically saying you shouldn't give a loan to someone who can't pay it, or who you don't believe will pay it. That will decrease fraud on both ends, both on the lender's side and on the borrower's side."
Konczal says many consumer protection rules outlined in the law were already on the books, but often went unenforced. He says the new agency will also focus on consumer-friendly practices, like making credit card contracts clear and fair to consumers.
"If I put four credit card forms in front of you, you would probably not be able to tell which one was the best. So what that might mean is taking these credit card contracts that are twenty or thirty pages and condensing them down to two or three pages."
Many Republicans in Congress also have been critical of the new agency for adding what they see as excessive regulation to the financial industry. Konczal counters that mortgage troubles and credit card debt have grown so much that federal action was needed to dig out from the crisis.