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How the two financial overhaul bills differ

House-Senate negotiators will start crafting a final financial overhaul bill this week. They already agree on many issues.
/ Source: The Associated Press

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, homebuyers 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:

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

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

Impact: Under the House plan, brokers would face the same rules that govern investment advisers. They'd be required to serve their clients' financial interests and would be legally liable if they advised them to act against those interests. To prove they're complying, brokers would disclose more information about their incentives or any conflicts of interest.

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: Some regulators were lax in their oversight before the crisis. Under the Senate plan, the regulators could overrule proposals intended to help consumers. Consumer advocates say the independent agency the House bill proposes would be tougher.

Prognosis: Uncertain. Rep. Barney Frank, the Massachusetts Democrat who will run the negotiations, favors an independent agency. So does the Obama administration. But industry opposition to the agency 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. One would ban refinancing offers that don't benefit borrowers. Another adds pre-loan counseling and stricter fee limits to high-cost mortgages. A third would fund legal aid for homeowners at risk of foreclosure.

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 homebuyers with spotty credit. Some people at risk of foreclosure would manage to keep their homes. Would-be homebuyers with weaker credit would find it harder to get mortgages.

Prognosis: The House rules are likely to be adopted. The House approved the rules with bipartisan support, then wrapped them into its overhaul bill. The Senate didn't consider a mortgage provision.

Car buyers
House bill: Exempts auto dealers that offer loans from oversight by a new consumer financial protection agency.

Senate bill: Auto dealers that offer loans would be overseen by the consumer protection bureau.

Impact: If the Senate provision survives, dealers would likely face new rules to rein in unfair and deceptive lending. The regulator could send examiners to inspect dealers suspected of preying on consumers.

Prognosis: Frank and the administration oppose the House provision that shields auto dealers from oversight. The provision probably won't survive. But auto dealers are still lobbying. Democrats might concede this point to Republicans who want to protect dealers.

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 the 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 through discounts or lower prices. 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. Retailers have been pushing for the provision since long before the financial crisis. Lawmakers seem inclined to satisfy them.