The House of Representatives have set into motion a plan that changes the way that mortgage lenders can conduct business with consumers.HR 4173, or better known as The Wall Street Reform and Consumer Protection Act, removes the right to create consumer protection laws from the hands of the Federal Reserve. The act created a new and independent agency, the Consumer Financial Protection Agency (CFPA), now responsible for creating laws to protect consumers against predatory financial practices.
A law passed earlier in 2009 prohibited certain practices by financial and lending institutions in an effort to reduce the number of issues consumers face, especially in the subprime lending market. The Wall Street Reform and Consumer Protection Act picks up where the previous law left off by using an appointed council to identify lending and financial institutions that are too big. The council is empowered to identify and break up big lending and financial businesses to reduce the risk that these businesses may fail and trigger a need for another government bailout.
Despite the Wall Street firms and banks putting up a fight against the passing of HR 4173, the House approved it. The act still has to pass the Senate, so the opposition is poised to continue its fight, expressing its resistance on the act passing. Whether or not the fight is a success or failure remains to be seen.