Will New Regulations Protect Consumers Since the recent financial crisis, a lot of attention has been given to the banking and finance industries in the US and how they are administered. Previously, US banks were being overly aggressive when granting loans so as to maximize their profits and revenues. It only took a small dip in the economy to offer the catalyst for an acceleration of home owners becoming delinquent on their mortgages and the complete situation snowballed. It was over exposure to toxic loans which caused a situation where much needed loans were not being granted and many found their selves without the essential capital that they required to operate In order to prevent the same thing from happening again in the future, the US government has introduced sweeping changes to the banking and finance industries in order to protect consumers from exposure to debt in the future. The calamity in itself has altered the mind set of several individuals anyway and a growing number of US citizens are now questioning the value of home ownership and credit in a whole. In addition to tightening up regulations in regards to who gets a loan and who doesnâ€™t, further restrictions have also been placed on other credit sources such as credit cards. The ethics of particular practices have been called into question and its no longer possible for credit card issuers to alter interest rates after a purchase has been made and greater notice must now be given before any changes are made. These changes are intended to give consumers the chance to pull out of any transactions if they feel that they cannot afford them. Some regulations have been introduced to aid consumers who have already suffered financial hardship because of the financial crisis. Home owners who have found that they could no longer afford to pay their loss mitigation, for example, are able to apply to the home affordable modification program (HAMP).
This program enables debtors to apply to have their monthly payments adjusted to a more affordable level allowing them to keep their home and avoid acquiring a bad credit rating. Other instances include short sale regulations, in which homeowners receive a degree of support and protection from the government should they find themselves unable to keep their house and their property is worth-less then the outstanding amount because of the lender. Whilst some individuals argue that stricter regulations pertaining to who can and canâ€™t qualify for credit may affect many individuals and small businesses adversely, its still believed that the greater protection and regulation would be helpful in the long run. The financial crisis affected not just those who did have loans and lines of credit, but even many others who did not because business went bust and employment rose. Although a person might not be pleased at not being granted the loan that they applied for, it could well turn out to be in their best interests and had such regulations been in place earlier then perhaps the recession would never have occurred in the first place.
Published on Feb 28, 2011
Since the recent financial crisis, a lot of attention has been given to the banking and finance industries in the US and how they are admini...