As President Obama said in his State of the Union address last month:
"If you’re a big bank or financial institution, you are no longer allowed to make risky bets with your customers’ deposits. You’re required to write out a ‘living will’ that details exactly how you’ll pay the bills if you fail—because the rest of us aren’t bailing you out ever again. And if you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices are over.”
[Related Article: How to Avoid Online Tracking. (Hint: You Can’t.)]
Not so fast. Republicans argue that while the intention of protecting customers is noble, these bills take the wrong approach. In September of last year, Mitt Romney lambasted the Credit CARD Act saying it “produced federal restrictions on credit card companies that have already led to higher interest rates, higher annual fees, and lower credit limits, especially for middle-class borrowers.”
To be fair, counter to Romney’s claims, several independent analyses have shown that the CARD Act has not led to higher interest rates and fees and in fact, according to the Federal Reserve, interest rates have dropped since February 2010 when the CARD Act went into effect. But most financial observers would concede that the banks and credit companies have been trying to find ways around the new regulations.
Romney is also highly critical of Dodd-Frank saying it “represents a massive overreach of the federal government into private markets…instead of streamlining and modernizing our financial infrastructure, Dodd-Frank layers mountains of incremental rules and constraints on the system that allocates capital—the lifeblood of our economy—to businesses of all sizes.”
While the new Consumer Financial Protection Bureau (CFPB) created by Dodd Frank will make life more difficult for credit companies, their powerful lobbyists have already begun rewriting the new rules.