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Senate and House negotiate bill to strengthen U.S. financial system.

WASHINGTON — If some lawmakers have their way, brokers will have to show they're serving their customers' financial interests. Debit cards could be cheaper to use. And homeowners would be less vulnerable to high-cost mortgages.

House-Senate negotiators will start crafting a final financial overhaul bill this week. They already agree on many issues. Both bills would create a process to close large, failing banks, form a council to regulate the financial system and force tighter oversight of certain risky investments.

But much remains unsettled. Congressional leaders might try to attract decisive votes by striking or changing some provisions. On issues where the two bills conflict, final decisions could mean big changes for investors, home buyers and taxpayers.

The compromise bill must be approved by both houses and sent to President Barack Obama for his signature. The president has said he wants a bill on his desk by July 4.

Here are some areas where Congress' final decisions will touch ordinary Americans:

Investors

House bill: Regulators would hold stockbrokers more accountable for the advice they give clients.

Senate bill: Regulators would study the subject but wouldn't be required to tighten existing rules.

Impact: Under the House plan, brokers would face the same rules that govern investment advisers, being legally liable if they advised clients to act against their best interests.

Prognosis: The House measure is likely to make the final bill, experts say, despite opposition from insurance brokers.

Consumer protection

House bill: A new agency would write rules to protect consumers from unfair credit cards, mortgages, payday loans and other products.

Senate bill: Would create a consumer financial bureau within the Federal Reserve. Its rules could be blocked by other regulators.

Impact: Under the Senate plan, regulators could overrule proposals intended to help consumers. Consumer advocates say the independent agency the House bill proposes would be tougher.

Prognosis: Uncertain. Industry opposition to the agency, which is supported by Obama, held up the Senate bill, forcing the compromise that would let other regulators overturn its rules.

At-risk homeowners

House bill: Adds new homeowner protections, including a ban on refinancing offers that don't benefit borrowers.

Senate bill: Requires mortgage lenders to consider whether borrowers can repay. Contains none of the House bill's specific provisions.

Impact: If the House language survives, fewer high-rate loans would go to home buyers with spotty credit and would-be home buyers with weaker credit would find it harder to get mortgages.

Prognosis: The House rules are likely to be adopted.

Retail shoppers

House bill: No change. Credit card companies and banks would still set the fees that retailers must pay when a customer uses a debit or credit card.

Senate bill: Would limit fees that card companies can charge for debit card transactions. Lets retailers offer discounts to customers who use payment methods that result in lower fees.

Impact: Under the Senate provision, consumer advocates say lower costs would be passed on to consumers. Financial companies counter that consumers would lose out because fewer companies would issue cards, and fees and rates would rise.

Prognosis: The Senate rules are likely to be adopted, as lawmakers seem inclined to satisfy the retailers.

Senate and House negotiate bill to strengthen U.S. financial system. 06/07/10 [Last modified: Monday, June 7, 2010 9:00pm]

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