How the overhaul affects you

NEW YORK (AP) - The financial overhaul is about more than exotic derivatives and complex risk assessments.

The legislation does not go as far as some would have liked. Auto dealers, who make most car loans, won't face oversight by the new consumer bureau. Nor will banks with less than $10 billion in assets, even though they serve most communities in this country.

Here's a piece-by-piece guide to the new rules.

CONSUMER PROTECTION

A new Consumer Financial Protection Bureau, to be housed in the Federal Reserve but run independently, will have the power to write consumer protection rules for banks and other financial institutions, like mortgage lenders.

It also will examine and enforce regulations already in place at mortgage lenders and banks that hold more than $10 billion in assets.

The bureau will have the power to ban financial products that it considers unsafe. It could also outlaw anything that might be confusing to consumers, like the fine print on credit cards or mortgages.

In theory, it also could block credit-card companies from charging especially high interest rates. The idea is to bring consumer regulation under one roof, rather than spreading it out among seven different agencies.

CREDIT AND DEBIT CARDS

Say you walk into a gas station and pick up some soda, candy and gum. The total is $11, but there's a sign at the register saying you can only pay by credit card if the purchase is $20 or more.

Under the new legislation, the minimum can be no more than $10, and only the Federal Reserve can raise it.

The Federal Reserve also will have the power to limit the fees that card issuers can collect on debit-card transactions. But the rule applies only to big banks, not to credit-card issuers such as Visa and MasterCard.

Right now, banks usually charge stores 1 to 2 percent for each swipe - fees that added up to nearly $20 billion last year. Stores and restaurants say lower fees would allow them to cut prices, and to hire more people.

But even if prices do fall at the store, banks might raise fees and rates for their customers. They could also scale back "reward" cards or free checking to make up for the money they're not collecting from stores and restaurants.

CREDIT SCORES

Right now, it can be maddeningly difficult to figure out your credit score. While you're entitled to one free credit report a year from each of the three credit reporting agencies under federal law, you almost always have to pay to see your actual score.

Under the overhaul rules, any lender that turns down a borrower - whether it's for a mortgage, a department store credit card or an auto loan - because of his or her credit score has to tell the borrower what that score is, and for free.

MORTGAGES

Remember all those risky mortgages that borrowers got without ever showing proof of income? The ones that blew up and set off the housing crisis? Under the new rules, lenders will have to verify a borrower's income, credit history and employment status.

On top of that, banks will have to hold on to at least 5 percent of the loans they make instead of selling them to investors. The idea is that they'll take fewer risks when they have skin in the game and aren't slicing, dicing and selling all their loans.

"They don't care about whether they make bad loans if the risk isn't theirs," says Dean Baker, co-director of the Center for Economic Policy and Research, a liberal Washington think-tank. "Now they might have to."

Of course, if the banks are scaling back their risks, that means it could be harder for you to get a mortgage.