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What you should know about the Dodd-Frank Act

Administrator Emeritus

What you should know about the Dodd-Frank Act

Hello FICO Forums community!


The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) is a piece of legislation proposed by U.S Senate Banking Committee Chairman Chris Dodd that is part of President Obama’s financial regulatory reform plan of 2009.  While much has changed and will continue to change with this act before passage, it aims:

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

Some key provisions of this legislation include:

Free Credit Scores

Consumers will have the right to a copy of their credit score if they were turned down for a loan, or if they were offered a rate other than the rate that the lender gives its best customers.


Lenders will not be allowed to pay mortgage brokers a commission based on an interest rate for a home loan to remove the incentive for mortgage brokers to put borrowers into a high interest rate loan; prepayment penalties will be limited or prohibited, depending on the type of loan; and before a loan is approved, lenders will be required to determine if a borrower can realistically can pay the mortgage payments, insurance and property taxes.

Interchange Fees and Use of Payment Cards

Stricter limits will be imposed on “Interchange Fees” -- fees that banks charge retailers when a customer pays with a debit or credit card – for debit card purchases only.


A newly-created federal agency called the Bureau of Consumer Financial Protection will have the authority to regulate mortgages, credit cards, payday lenders, check-cashing companies and lenders that provide private student loans.


The folks at FICO want to know what you think about this historic extensive overhaul of laws governing U.S. lending institutions.  Do you think it goes far enough?  Too far?  What would you add or eliminate?  Do you feel protected?


Please share any thoughts you might have on this topic by replying to this post.   Many thanks for your contributions!



Message 1 of 86
Established Contributor

Re: What you should know about the Dodd-Frank Act

I do not think it goes far enough.  Can we also throw in Experian not allowing us to get our FICO scores?  We should have access to every score and all information that a lender can possibly use to deny or give us worse interest rates.

Current Score: Eq: 823 Tu: 830
Goal Score: Eq: 850 Tu: 850

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Message 2 of 86
Not applicable

Re: What you should know about the Dodd-Frank Act

The points outlined here I completely agree should be implemented moving forward.  What we don't know is what no one has seen yet buried within the 2000+ page reform bill.  I'm pretty sure our representatives + the senate has not read every page of it.  They don't need to, as long as they have talking points they can hand it off to someone else. 


I'll be in the market for a new house in 2011 (if not sooner) and what worries me will be another large delay in loans to provide time to adjust to this bill. 


So, for the most part I agree with the talking points of the bill and I believe it will help protect 90%+ of the population.  The other 10% who could properly manage their money and stay in check with spending will be at a disadvantage moving forward. 

Message 3 of 86
Not applicable

Re: What you should know about the Dodd-Frank Act



@Tazman81 wrote:

I do not think it goes far enough.  Can we also throw in Experian not allowing us to get our FICO scores?  We should have access to every score and all information that a lender can possibly use to deny or give us worse interest rates.


I'm with you.  Sure seems like a consumer ought to be entitled to any information that any entity maintains on them.  I'd like to be able to tell my grocery store, hand over all the records associated with my bonus card.


However, if I'm the entity, I'm not sure I'd like that.  Seems like I ought to be able to keep my own customer data private, short of extraordinary circumstances, such as a court order.


And the bill would allow you to get your Experian score if that was the basis for not getting a loan.




Message 4 of 86
Not applicable

Re: What you should know about the Dodd-Frank Act

I've enclosed a couple a summaries from the Dodd act:


Title: Restoring American Financial Stability Act of 2010 
Sponsor: Sen Dodd, Christopher J. [CT] (introduced 4/15/2010)      Cosponsors (None) 
Related Bills: H.R.4173 
Latest Major Action: 5/25/2010 Senate floor actions. Status: Returned to the Calendar. Calendar No. 349. 
Senate Reports: 111-176



Restoring American Financial Stability Act of 2010 - Financial Stability Act of 2010 - Establishes the Financial Stability Oversight Council to: (1) identify risks to the financial stability of the United States; (2) promote market discipline; and (3) respond to emerging threats to the stability of the United States financial markets.

Establishes within the Department of the Treasury: (1) the Office of Financial Research (Office) to support the Financial Stability Oversight Council; and (2) the Financial Research Fund to fund the Office.

Grants the Board of Governors of the Federal Reserve System (Board) additional authority to require reports and conduct examinations of certain nonbank financial companies and bank holding companies.

Revises supervision and prudential standards for nonbank financial companies supervised by the Board and for certain bank holding companies.

Establishes in the U.S. Bankruptcy Court for the District of Delaware an Orderly Liquidation Authority Panel to authorize the Secretary of the Treasury (Secretary), under specified circumstances, to appoint the Federal Deposit Insurance Corporation (FDIC) as receiver of a financial company in default or in danger of default whose failure would have serious adverse effects on financial stability in the United States.

Enhancing Financial Institution Safety and Soundness Act of 2010 - Transfers all functions of the Office of Thrift Supervision (OTS) and the OTS Director to the Board, to the Office of the Comptroller of the Currency, and to the FDIC.

Abolishes OTS.




Prohibits the issuance of charters for federal savings associations.

Private Fund Investment Advisers Registration Act of 2010 - Amends the Investment Advisers Act of 1940 with respect to: (1) the regulation of advisers to hedge funds; (2) collection of systemic risk data; and (3) the asset threshold for federal registration of investment advisers.

Office of National Insurance Act of 2010 - Establishes within the Department of the Treasury the Office of National Insurance to monitor all aspects of the insurance industry, including identification of issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system.

Nonadmitted and Reinsurance Reform Act of 2010 - Sets forth procedures for: (1) reporting, payment, and allocation of nonadmitted insurance premium taxes; and (2) regulation of credit for reinsurance and reinsurance agreements.

Bank and Savings Association Holding Company and Depository Institution Regulatory Improvements Act of 2010 - Imposes a moratorium upon FDIC provision of federal deposit insurance for credit card banks, industrial loan companies, and certain other companies under the Bank Holding Company Act of 1956.

Amends the Bank Holding Company Act of 1956 to revise requirements for reports, examinations, and regulation of functionally regulated subsidiaries, including concentration limits on large financial institutions.

Over-the-Counter Derivatives Markets Act of 2010 - Amends the Commodity Exchange Act to: (1) extend joint rulemaking and regulatory authority of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to over-the-counter derivatives markets; and (2) require large swap trader reporting.

Amends the Gramm-Leach-Bliley Act to repeal the prohibition against the regulation of security-based swaps.

Amends the Securities Exchange Act of 1934 to set forth: (1) clearing requirements for security-based swaps; (2) registration and regulation procedures governing security-based swap dealers and major security-based swap participants; and (3) position limits and position accountability for security-based swaps.

Directs the SEC, the CFTC, the Financial Stability Oversight Council, and the Treasury Department, individually and collectively, to consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation of certain SWAPS.


And the other:


Look at "CRS Summary."


Message 5 of 86
Valued Member

Re: What you should know about the Dodd-Frank Act

I personally believe there should be FULL disclosure of all of EVERY lender's underwriting criteria, available on the Internet, including the origin of the credit scores used (tell us if it's FICO or FAKO), so that everyone could determine if they will be approved BEFORE possibly wasting an inquiry, and spending the time to do an app for nothing. Nondisclosure should have a fine attached to it, with half of the fine going to the potential borrower. I also believe that the auto dealers, bank's new account dept, insurance companies, and potential employers (anyone and everyone who has a *reason* to pull a credit report) should be subject to the new rules, as well. And, as long as we're going, all those companies who do "soft" pulls to make credit offers should be required to drop us a note in the mail if they pull also. And lastly, we the people, should be allowed to choose which companies are allowed to do a "soft" pull. For example, if I don't want B of A to do soft pulls to offer me a credit card, I can say NO, just to B of A, and , if I like Wells Fargo, I can say OK to only Wells Fargo. And again, any violation has a fine, half payable to the individual whose report/score, is pulled.

Message 6 of 86
Senior Contributor

Oh, I like the idea of half of the fine monies going to t...

Oh, I like the idea of half of the fine monies going to the consumer!  Yes, pay me please!!!  Smiley Happy

Message 7 of 86
Not applicable

Re: What you should know about the Dodd-Frank Act

Given the political climate in an election year and the hassle to get 60 votes in the senate to pass everything, this has led to the watering down of this bill. However, it is a giant leap in terms of improvement with key benefits that will protect tax payers, consumers, small businesses and the public in the future. 


ANOTHER important fact I would like to add:


This Dodd-Frank Legislation Extends Protecting Tenants at Foreclosure Act


Renters who find themselves indirect victims of foreclosure were not forgotten in the financial reform legislation signed by the President on Wednesday July 24.

The Dodd-Frank bill will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014. PFTA provides renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease.


The legislation also includes a provision that requires the HUD secretary to develop a program to refinance troubled multifamily mortgages.


According to the  National Low Income Housing Coalition (NLIHC) a growing number of multifamily buildings are facing foreclosure, the combined result of inflated mortgage costs and financially strapped renter households.


As a owner of multifamily property, I have seen the horror first hand with friends who have to walk away left tenants and the banks standing. Therefore, addressing the growing multifamily foreclosure rate shows a keen understanding that it is not just homeowners who are losing their homes to foreclosure.




Remember The GOLDEN Rule:  It is NOT about where you live, It’s about how you live. Be sure to do unto others as you would have them do unto you. Behave toward others as you would like to have them behave toward you! JAH Guide!

Message 8 of 86
Not applicable

Re: What you should know about the Dodd-Frank Act

As a small business owner, i would love to see tighter control on Interchange rates,  we currently don't take Amex or Discover because the rates are just too high,  And even with Visa/MC we are paying thousands a year for the privilidge of accepting credit cards.   and we never know what the rate will be on any individual card,  because each type of card has its own rate.     it's a nightmare.

Message 9 of 86
Valued Contributor

Re: What you should know about the Dodd-Frank Act

@Tazman81 wrote:

I do not think it goes far enough.  Can we also throw in Experian not allowing us to get our FICO scores?  We should have access to every score and all information that a lender can possibly use to deny or give us worse interest rates.

I disagree.  I don't think that we necessarily should have access to our credit scores.  It sort of defeats the purpose if we're allowed to create entire communities dedicated to micromanaging our scores.  For the algorithm to be effective, I think it should be based on consumers' typical behavior, not how they act to manipulate their scores, lol.


I'm not saying I want EQ and TU scores unaccesible, and I'm not saying I don't want access to my EX score.  Just saying I don't think it's owed to us.  We have access to any score when denied for credit or when given a crappy rate.  That's enough to make sure that dealers and creditors aren't playing games with us.

Starting Score: EQ: 665 - TU: 687
Current Score: EQ: 749 - TU: ---
Goal Score: EQ: 760 - TU: 760

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Message 10 of 86
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