Inside Financial Reform

President Obama could sign landmark financial reform legislation as early as this week. SmartMoney.com senior consumer reporter Kelli Grant shares what's in the bill and what it means for consumers.

While much of the legislation specifically addresses banks and businesses, the overall aim is one that consumers will benefit from: a more stable financial system. The hope is that the new tenets in place will prevent another financial catastrophe along the lines of the big failures and bailouts of 2008, and offer some relief from that last crash.

The new Consumer Financial Protection Bureau will enforce and set rules on consumer financial products such as credit cards and mortgages. Think of it like a fast track to handle problems like those credit card abuses covered under last year's CARD Act. The problem: plenty of industries have sought to be exempt, including auto dealerships.

Regulators will have more power to take over and close failing non-bank businesses, instead of handing them bailouts to prop them up. The banking industry would fund those liquidations, rather than taxpayers. But it's a safe assumption that consumers will pay somehow - right now we're seeing more checking account fees from big banks looking to recoup losses from new credit card regulations.

Part of the reform restructures mortgages, from the types offered to how they're funded. Mortgage lenders are already paying more attention to prospective borrowers' ability to pay back loans, and are requiring more documentation about income and assets to back that up. New applicants are likely to see costs rise, especially if they have less-than-stellar credit or don't meet lenders' new, stricter requirements.

The Securities and Exchange Commission would have the ability the set a regulation regarding universal fiduciary duty for broker-dealers and their reps. Essentially, anyone selling you securities has to make sure the investment fits your needs. Financial advisors already have such a duty - they must act in a client's best interest and disclose any conflicts of interest, for example, that they receive commission on the sale of that investment.

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Kelli Grant & Erika Wortham