Dodd-Frank Consumer Credit Reforms Under Assault

Do you accept credit cards in payment from your customers? Does your business use credit cards to pay vendors? Either way, you will be affected by the new consumer protection rules to be promulgated by the Consumer Financial Protection Bureau under the Dodd-Frank financial regulatory reform bill signed by President Obama in July. One of the top Republican congressmen on the Financial Services Committee, Representative Jeb Hensarling of Texas, has promised to defund the Bureau once the new Republican House majority assumes power in January.

Other incoming House Republican leaders, including presumptive Majority Leader Eric Cantor of Virginia, and leading Financial Services Committee chair candidates Spencer Bachus of Alabama and Ed Royce of California, are expected to introduce legislation revoking the independent funding of the Bureau from the Federal Reserve which is set to begin in July, 2011. Royce has also proposed giving bank regulators the power to veto any Bureau rules.

Republican Congressmen and banking industry lobbyists are attacking the rulemaking powers of the Bureau, because President Obama is likely to veto any Republican backed legislation weakening the power of the new regulators, headed by Harvard Law Professor and consumer advocate Elizabeth Warren. Republicans believe subjection of the Bureau’s budget to the annual Congressional budgeting process will subject the Bureau’s exercise of its rulemaking powers to increased political pressure from a Republican dominated House, where appropriation measures must originate.

FASB Promises Prompt Mark To Market Rule Reform

Responding to intense congressional pressure to help unblock housing market credit, SEC Acting Chief Accountant James Kroeker promised to work with FASB Chairman Robert Herz to revise the mark to market accounting rules in a way that would give permission to banks and other mortgage lenders to assign a value to long term debt instruments according to the cash flow they produce rather than their sale value in an arms length transaction on any particular day. Both men promised to have a new rule ready within the next three weeks in an effort to unblock housing credit markets and staunch the flow of red ink in the mortgage lending industry. Trust Congress to try finding ways to solve this terrible problem without writing another trillion dollar check to the financial hot shots who got us into this mess.