What financial overhaul means for us

Getty ImagesAmid the endless spewing of oil into the gulf and the drama over President Barack Obama's firing of General Stanley McChrystal over the general's overly chatty time with a Rolling Stone reporter, Congress passed financial overhaul legislation. With all of the confusing talk of derivatives and complex risk assessments surrounding it, it may seem far removed from our everyday lives. But the fact is, the legislation has several new rules designed to help and protect everyday consumers from signing up for bad loans and credit cards with moving-target interest rates and teeny-tiny print agreements that will cost you big bucks in the end.

Here's a look at a few of the changes on the way:

A new Consumer Financial Protection Bureau will be established to write consumer protection rules for banks and other financial institutions, including mortgage lenders. It will be housed in the Federal Reserve, but run independently. We will need to see just how much authority this bureau will truly have. It will not have oversight on banks with less than $10 billion in assets, namely most community banks. And if federal banking regulators don't like a new consumer protection rule, they can appeal to a council made up, in part, of their fellow banking regulators. Hmm.

Mortgage loans. To make the kind of risky, no-sense loans that brought down the housing market a welcome thing of the past, new rules will require lenders to verify a borrower's income, credit history, and employment status. Hard to believe that was not a set-in-stone requirement before. Also, banks will now have to hold onto at least 5 percent of the loans they make, and not sell 100 percent of them to investors. The thinking is if they have a stake in the loans, they will be less likely to make risky ones.

Credit and debit cards. As we grow more accustomed to using credit and debit cards for smaller purchases, it can be jarring to pull out a card only to find the business will not allow it unless you spend $20 or more. Under the legislation, the minimum limit for card usage will be no more than $10.

Also: The Federal Reserve will have the power to limit the fees that card companies collect on debit-card purchases. If they do, whether those savings to businesses would be passed onto consumers remains to be seen.

Credit scores. We've all learned that we have the right to a free credit report once a year from all three major credit reporting agencies. But it's still difficult to ferret your credit score without paying for the information. Under the new rules, if you're turned down for a loan, the lender must reveal the credit score to the borrow if it is the reason for the loan denial.

Financial advisers. They'll have to disclose to clients any fees, disciplinary actions, and commissions they may be earning from the products and services they are selling.

How financial overhaul affects your everyday life [AP]
Financial overhaul measure elicits cheers and concern [Washington Post]