Even though the government’s newest consumer watchdog agency doesn’t have much power yet, it already has put programs in place to protect people who buy homes, get credit cards and check their credit scores, according to a progress report the agency released Monday.
The new Consumer Financial Protection Bureau has created a series of programs to help consumers learn about financial products before they buy. The one with the catchiest name is “Know Before You Owe,” which is trying to simplify the complicated mortgage disclosure forms consumers receive when considering buying a home.
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For years, consumer advocates have complained the forms are too complex to do their job: Inform potential homebuyers about the possible pros and cons of different mortgages. Bankers have complained too, saying the two federally required forms are burdensome. Various federal agencies have worked for years to fix the problem, so far to no avail.
The CFPB plans to fix it by July 2012.
The goal is to create “a single, simpler form that makes the costs and risks of the loan clear and allows consumers to comparison shop for the best offer,” according to the report.
The bureau’s plans for bringing the same simplification to credit cards are much less specific. The CARD Act of 2009 did a lot to reduce late fees, interest rate hikes and overdraft fines, according to a survey conducted this year by the CFPB. But there’s still room for improvement, according to the report.
“The Bureau’s next challenge will be to further clarify price and risk and make it easier for consumers to make direct product comparisons,” the report says.
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The bureau has other research projects underway, including one on how the different practices among the three major credit reporting agencies may harm consumers, and another on whether it might be possible for Americans sending money to family and friends abroad to use those payments to help improve their credit scores.
Credit doesn’t stop at the bank’s doorstep. Many non-bank institutions, including payday lenders, prepaid debit cards, check cashing and credit reporting companies also have a significant role to play in whether people can get credit. The Dodd-Frank financial reform act, which created the CFPB, gives the bureau power to regulate the biggest companies in these sectors.
Which companies? In which industries? The bureau has been asking companies and consumer advocates those questions for a few months now. It plans to issue its ruling on July 21 for which companies will have to comply with new rules regarding fair competition and transparency with consumers.
To do all this work, the bureau has hired nearly 500 people, according to the report. Some are new to government service, while many others were working as regulators in other federal agencies before their responsibilities were taken over by the bureau.
Correction: This article was revised July 20, 2011 to correct the date for which the CFPB plans to make the simpler mortgage disclosure form available to consumers.
Image: Stuart Grout, via Flickr.com