2 Sides of Credit Card Regulation

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2 Sides of Credit Card Regulation

Source: web

The lines have been drawn. On the one side, there are the spectacularly wealthy bank CEOs and on the other, there are supporters of Dodd Frank, the 2010 law that’s been one big headache for those bankers who want nothing more than to return to the “good ol’ days” when regulations were sparse. And it looks as though Jamie Dimon and his bank are partially responsible for new and far more aggressive battles over whether or not there’s too much or not enough oversight. Some are saying that loss proves there’s too much oversight; others have justifications saying it’s proof there’s still not enough regulation. Just as those lines are drawn between supporters and big banks, there are even bigger lines that separate the average American consumer. An overwhelming 82% of Americans say not only is there too much regulation on Wall Street and the financial sector as a whole, but many say it could stand even more oversight.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is a huge statute that brought about even bigger changes to the American financial regulatory sector.

Every time a scandal breaks, such as the one created earlier this year when a staggering $7 billion error in trading accounts was made public by JPMorgan Chase, it seems though it fans the flames surrounding Dodd Frank. It would appear this latest effort is carrying more of a punch. That could be because of the upcoming presidential elections. If you saw the first presidential debate, you know Dodd Frank and the 2010 Card Act got a bit of air time; Romney wants to repeal it in its entirety while Obama, who signed it into law, naturally wants to keep it in place.

Lawsuits abound, too. Several groups have already filed suits claiming the law is unconstitutional. Depending on what happens, how far the cases get in the legal system and who finds his way to the White House in January, there are other repercussions that could affect many things, including President Obama’s health care law.

Some are citing the lack of public input as the law was making its way through congressional channels as reasons why it passed. While that’s true, it should also be noted it was this law that put into place the Consumer Financial Protection Bureau, which has brought new degrees of transparency in the financial industry.

Consumers are more than pleased with the changes; after all, this new law put into place mechanisms that keep penalties and other fees to a minimum, ensured proper and due notice was provided to consumers before a credit card company raised interest rates and put a halt to those card companies operating in “unfair or deceptive” ways. The US Securities and Exchange Commission (SEC) Chair said, when it was passed,

This landmark legislation set out to reshape the US regulatory landscape, reduce systemic risk and help restore confidence in the financial system.

Having failed to block the passage of Dodd-Frank, the Republicans, who control the House of Representatives, there continue to be aggressive efforts to eliminate the law in its entirety. And if they can’t do that, they’re more than happy to ensure as little funding as possible is funneled to the agencies, such as the Consumer Financial Protection Bureau. Both efforts have failed so far. The results truly are remarkable and despite the opposition from Republicans, there have not been the kind of problems predicted; in fact, the law is already working to keep a level playing field. Consumer Reports paints the picture:

New federal rules barring many abusive practices by credit-card issuers seem to be having an effect: Only 12 percent of Americans said their credit-card companies had generally treated them unfairly, according to Consumer Reports’ nationwide survey, down from 15 percent in 2010, and 22 percent in 2009.

There are some bankers, too, that agree and say the regulations, for the most part, have served good purposes. Ah, but there are others, including Chase CEO Jamie Dimon, who insists nothing good can come from all this regulation. All of the bickering back and forth is moot. As mentioned, there are only two people who can change the way the law continues or even if does continue at all and they are the two men looking for your vote in November. Once that’s decided, there will be one person who ultimately determines its fate. You can be sure President Obama needs this law to stay in place if he’s re-elected since it will play a significant role in how his health care reform moves forward. If Mitt Romney takes over, he’s made it clear his plans for all of these new regulations. He agrees some regulation is necessary, but not to the extent of Dodd Frank.

What are your thoughts? Do you think Dodd Frank was long overdue or long overreaching? Share your thoughts and let us know if you’ve filed a complaint with CFPB and what kind of outcome you’ve had since.

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About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


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Advertiser Disclosure

CREDIT DAD is an independent, advertising-supported website. Many debit cards, credit cards and other financial offers that appear here are from companies from which CREDIT DAD Websites receive compensation. This compensation may impact how and where products appear on this website (including, for example, the order in which they appear). CREDIT DAD Websites do not include all card offers in the marketplace.