The Bureau of Consumer Financial Protection will operate under the auspices of the Federal Reserve and should be up and running by the end of 2011. It will ultimately set rules and regulations for any business that provide financial services to consumers, controlling a host of financial products that include:
Right away, consumers should notice one thing: Their contracts will become easier to understand. The new law requires banks and other financial entities to do away with the kind of hidden fees and disclosures that they used to bury within the fine print. Congress' goal was to make consumers more aware of the impact of any purchases or financial decisions they make, which would ultimately make them more informed and spur competition.
Eventually, this transparency may lead to the elimination of financial frustrations like penalty fees and surprise charges. In theory, consumer awareness of these nickel-and-diming practices -- and the ability to look for a better deal as a result -- could drive prices down. In addition, consumers will have more information to allow them to compare products, select the ones that meet their needs and refuse the ones that don't [source: Mantell].
Building on the idea that the market can reward those who help themselves, the bill also creates an Office of Financial Literacy and an Office of Financial Protection for Older Americans. Both are designed to help regular folks achieve a measure of financial independence through education.
People will still have to take responsibility for their own actions and financial decisions, of course, but these offices -- and the Bureau at large -- will help to educate consumers on the consequences of those actions.
For more information on financial matters, please see the links on the next page.