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Some Lesser-Known Parts of Dodd-Frank Reform Could Affect You

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We’ve done a bunch of stories about the Consumer Financial Protection Bureau, which officially opened its doors to the public last Thursday. But there are many more aspects of the Dodd-Frank Wall Street reform act that also took effect last week, just one year after President Obama signed the bill into law. For a good, in-depth summary, check out this memo by Sullivan & Cromwell LLP, a Manhattan-based corporate law firm. In the meantime, here’s a quick run-down of some of Dodd-Frank’s key provisions:

1. Denied Credit? You Get to See Your Real Score.

One part of the law many consumers may notice is the new rule requiring lenders to tell you your credit score if they use it to deny you credit. That’s important because right now, consumers only get to see their credit report, with general information about their credit histories, once per year, and that report doesn’t include the actual score that lenders use to evaluate your creditworthiness.

So the next time you’re denied a loan, as of Thursday you can ask the simple question “Why?” And now the lenders have to tell you.

2. Earning Interest on Your Checking Account

Why is it that we earn interest (though lately not much) on savings accounts, but none on checking accounts? Dodd-Frank could change that. Prior to the law’s enactment, it was illegal for banks to pay customers interest on checking accounts. As of July 21, institutions are allowed to start offering such accounts (though they’re not required to).

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3. More Aggressive Representation for Consumers in Court?

So far, six federal agencies have been responsible for bringing lawsuits against companies accused of violating consumer protection laws.

As of July 21, that power transfers over to the CFPB. There’s a chance the new bureau will take a more adversarial stance in some of those lawsuits, since some agencies—notably, the Office of the Comptroller of the Currency and the Office of Thrift Supervision—have been consistent defenders of financial institutions in other areas like predatory mortgage rules.

4. Maybe Your Bank Will Stick Around a Little Longer

During the 1990s and early 2000s, big bank mergers made the news almost weekly. Under Dodd-Frank, though, institutions must prove they are well-capitalized and well-managed before they can merge. That could mean an end to shenanigans like Washington Mutual’s purchase of Commercial Capital Bancorp in 2006, two years before WaMu’s disastrous investments in subprime mortgages caused the bank to fail in what amounted to the largest savings and loan bankruptcy in U.S. history.

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Image: Official White House Photo by Lawrence Jackson, via Flickr.com

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  • charles

    Please review your article Chris. You should do your homework. It was not illegal to pay interest on checking accounts. Banks have been doing so for years. They were often called Now Accounts.

    If you had done the research needed, you would have seen that it is BUSINESS CHECKING ACCOUNTS that could not pay interest. That is what the bill addressed. Not individuals. This is what is wrong with elites who have no business experience pretending to be business experts. Come on man.

    How many other credit.com articles are this poorly researched?

  • Chris Maag

    Thanks for writing, Charles. I’m glad you consider me to be elite. Maybe someday I can live up to that description. Now that you raise the question, I went back to check, and I see that you’re right, the change does affect business checking accounts. We’ll change the story to reflect that. Thanks again.

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