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BOSTON (TheStreet) — There aren't many surprises contained in the financial-reform bill dropped on Congress by Senate Banking Committee Chairman Christopher Dodd (D-Conn.).

Many of the bullet points have already been used as warning shots in recent months, challenging Wall Street firms, banks and other financial institutions. Protecting Main Street from Wall Street is a recurring theme. And its centerpiece, from a consumer viewpoint, is the creation of a Consumer Financial Protection Bureau.

"American consumers already have protections against faulty appliances, contaminated food and dangerous toys," an executive summary of Dodd's bill reads. "With the creation of this bureau , they'll finally have a watchdog to oversee financial products."

The proposed agency will be funded by the Federal Reserve and led by an independent director appointed by the president and confirmed by the Senate. It will have the authority to examine and enforce regulations for banks and credit unions with assets of at least $10 billion. Mortgage-related businesses, large non-bank financial companies, debt collectors and consumer-reporting agencies also fall under its purview.

An initial, and persistent, complaint by critics focuses on placing the new bureau within the Federal Reserve.

"A lot of attention is being paid to what address the new consumer watchdog will have, but the critical question is will this office have the authority and independence it needs to prevent a replay of the abuses we have seen in recent years that burned so many Americans?" Dodd said in a recent statement.

The question may have been intended as rhetorical. But the question of the bill's effectiveness is already a hot topic as debate begins on the bill, and the more than 300 amendments already proposed for it.

Supporters of the legislation have no shortage of talking points — since the recession started, more than 8.4 million jobs have been lost, the unemployment rate remains close to double digits and nearly 7 million have lost their homes to foreclosures.

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Among the selling points of the bill: It unifies federal consumer protection efforts under one agency; it ensure people get "clear information" on loans and other financial products; with this bureau "on the lookout for bad deals and schemes," consumers won't have to wait for Congress to pass a law to be protected from bad business practices; it creates a new Office of Financial Literacy and a national consumer complaint hotline to report problems with financial products and services.

Aside from those who are against further financial regulations, questions are emerging as to whether the legislation goes far enough to help consumers.

The new Credit Card Accountability Responsibility and Disclosure Act offers a slate of protections to rein in fee and rate increases on existing card lenders. The new legislation, in theory, could pick up where the CARD Act left off, regulating fees, terms and rates for all such products issued in the future.

But would the $10 billion threshold for financial institutions create a loophole, especially for smaller, community-based lenders? Would it trump state regulations or create legal entanglements that might take legal action to sort out? How much oversight would the bill provide for smaller entities such as payday lenders, pawnshops, auto dealerships or in-store financial services? Could oversight take years to implement?

Stricter regulations could tighten credit lines. Would guidelines exclude certain borrowers based on the risk presented to an institution?

Robert E. Story Jr., chairman of the Mortgage Bankers Association, is among those questioning the bill's effect on his industry. The legislation may have unintended consequences for borrowers.

The bill requires companies that deal in products like mortgage-backed securities to retain at least 5% of the credit risk unless they meet risk standards.

"Qualified residential loans that exhibit certain characteristics — such as 30-year fixed-rate, fully documented, sufficient down payment — ought to be exempted from any risk-retention requirement," Story says. "These types of loans have well-known and documented risk profiles easily understood by the investor and should not require that the originator retain a portion of the loan on its books. Requiring originators, especially small, locally-based lenders, to retain a certain percentage of the loan on their books threatens the very business model that offers consumers choice and competition, and thus more affordable loans."

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