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Senate passes landmark financial services reform

Reform bill thumbnailsWith the Senate’s passage of the financial reform bill today, this wide-reaching legislation will be sent on to President Obama to sign into law.

It’ll take time to digest all of the implications of the 2,300-page bill, but a few areas you’ll want to hit right away include:

Interchange fees. The bill curbs fees that can be levied on debit-card transactions.  That’ll be a revenue hit for your local banks and credit unions that issue debit cards tied to checking and savings accounts.  The question is, as Sandra Block points out in her USA Today column, where are they going to make up the lost income?  Quiz banks that do business in your market about plans for hiking other consumer fees, as well as what sort of hit they expect from the interchange fee rules change.

Main Street lending. Originally the new Consumer Financial Protection Bureau created by the Restoring American Financial Stability Act would’ve included oversight of automobile dealers and other businesses that finance the purchase of goods and services.  Auto dealers obtained an exemption and on Tuesday the office of Sen. Olympia Snowe told me that her proposed amendments which would spare other small businesses — like orthodontists and jewelers – from the same scrutiny also passed. Here’s a story from The Hill that explains the amendments.

This makes a great peg for a personal finance story about the types of financing offered by dentists, orthodontists, cosmetic surgeons and other providers of care often not covered by insurance, as well as a review of financing practices and oversight among dealers of big-ticket items like appliances, jewelry and home improvements. Same goes for auto dealers, especially those catering to the sub-prime market.

Unintended consequences.  Now that journalists and analysts have had a little time to digest the financial overhaul details, they’re finding all sorts of ripple effects on constituencies that might not immediately spring to mind.  For example, this WSJ piece points out that farmers who use derivatives to hedge on fuel prices, feed costs and other volatile expenses may find the new laws boost their costs.  To learn more about consequences specific to your market, consider hosting a panel discussion attended by local bankers, academics and lawmakers.  Post the results in Q&A format or other alternative story-telling means.

Here’s a Forbes article along the same lines; it points out that reform could actually put credit further out of the reach of consumers it was instigated to protect. And here’s a 12-page summary of the bill (PDF) that Deloitte, the audit firm, prepared for its clients.

Looking ahead:  Next week is very light on routine economic reports, but earnings season is getting into full swing.  Check with companies on your beats and review calendars such as this one by Bloomberg for other local possibilities.  My recent blog post Put some zing into your earnings season stories” offers tips for using financial releases to spin broader economic and corporate reports.

In Beats, Economy, Investing | Banking, Personal finance.

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