Federal Financial Regulatory Reform – What it means to consumers

In July 2010 President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Included in this landmark legislation is the creation of the Bureau of Consumer Financial Protection (BCFP).  The bureau’s jurisdiction will include the vast majority of the financial services industry, including those products and service offered by licensed financial service centers (FSCs). Millions of Americans routinely use these stores to conduct basic financial transactions, including cashing checks, paying bills, taking out small loans, wiring money overseas and reloading prepaid debit cards among other products and services.

Recent developments
On September 17, 2010 President Obama appointed Elizabeth Warren to the position of Special Advisor to the President with responsibility for setting up the BCFP. Warren first proposed the idea of a consumer financial protection agency. Her responsibility includes overseeing all aspects of setting up the new agency, including hiring staff and determining its priorities. At the time he made the appointment President Obama indicated that Warren would not be the Bureau’s first director but would assist in identifying that individual. No candidate for this position has been named at the present time.

Commonly asked questions:

Q. When will the new Bureau be officially in charge?
 The target date for BCFP to be up and running is July 2011. By that time, BCFP should have adequate staff and procedures in place to commence operations. 

Q. What will the new Bureau be in charge of?
 BCFP will have jurisdiction over virtually every finance-related product used by consumers, including credit cards, home mortgages, loans, checking accounts and all the services customers typically receive at financial service centers, including bill payment, check cashing and wire transfers. The bureau will have the power to write new regulations and will have enforcement powers as well. 
Q. Will I still be able to cash my check/pay bills/wire money/get a payday loan/get a money order at the store I go to now?  Will my costs for these transactions go up?
 Right now, it is too early to know what impact BCFP will have on customer access to financial services. The bureau is still several months away from being up and running.  It will need to establish priorities as to those financial products and services to first target for stronger regulatory oversight. We expect that new rules impacting our industry, and customer access to the products and services received at financial service centers, to be at least one year away from being implemented. Eventually, BCFP could significantly reduce, if not eliminate altogether, Americans’ access to small dollar credit and other financial products, and eliminate their ability to choose the financial products and services that they need and want at locations that are most convenient to them.

Q. These stores are not banks so why are they included within the jurisdiction of BCFP?
 Good question. While Congress was deliberating creation of BCFP, the industry repeatedly made the argument that it should not be subject to the jurisdiction of this new agency. Unfortunately, Congress adopted a “let’s include everyone” mindset when defining those industries subject to BCFP jurisdiction.

Q. Is anyone doing anything to protect my access to these products and services?
   BCFP is due to be up and running by July 2011. In the coming months FiSCA will be actively engaged throughout the process creating this new government bureaucracy to ensure that the interests of our industry, and the millions of Americans who use our members’ services every day, are represented. Given that the BCFP will soon become a fact of business life, it is imperative that the new regulations create a level playing field in the marketplace so that the FSC industry can fairly compete with banks and other traditional financial institutions and that consumers continue to have access to the financial services they need where and when is most convenient for them. Regulators must fully understand the crucial role our industry plays in meeting the financial needs of millions of Americans every day. This has become FiSCA’s Number One mission.