Tag Archives: Barr

The Financial Meltdown and Consumer Protection

Posted on by

photo by HTO

Larry Kirsch and Gregory D. Squires have published Meltdown: The Financial Crisis, Consumer Protection, and the Road Forward. According to the promotional material,

Meltdown reveals how the Consumer Financial Protection Bureau was able to curb important unsafe and unfair practices that led to the recent financial crisis. In interviews with key government, industry, and advocacy groups along with deep archival research, Kirsch and Squires show where the CFPB was able to overcome many abusive practices, where it was less able to do so, and why.

Open for business in 2011, the CFPB was Congress’s response to the financial catastrophe that shattered millions of middle-class and lower-income households and threatened the stability of the global economy. But only a few years later, with U.S. economic conditions on a path to recovery, there are already disturbing signs of the (re)emergence of the high-risk, high-reward credit practices that the CFPB was designed to curb. This book profiles how the Bureau has attempted to stop abusive and discriminatory lending practices in the mortgage and automobile lending sectors and documents the multilayered challenges faced by an untested new regulatory agency in its efforts to transform the broken—but lucrative—business practices of the financial services industry.

Authors Kirsch and Squires raise the question of whether the consumer protection approach to financial services reform will succeed over the long term in light of political and business efforts to scuttle it. Case studies of mortgage and automobile lending reforms highlight the key contextual and structural conditions that explain the CFPB’s ability to transform financial service industry business models and practices. Meltdown: The Financial Crisis, Consumer Protection, and the Road Forward is essential reading for a wide audience, including anyone involved in the provision of financial services, staff of financial services and consumer protection regulatory agencies, and fair lending and consumer protection advocates. Its accessible presentation of financial information will also serve students and general readers.

Features

  • Presents the first comprehensive examination of the CFPB that identifies its successes during its first five years of operation and addresses the challenges the bureau now faces
  • Exposes the alarming possibility that as the economy recovers, the Consumer Financial Protection Bureau’s efforts to protect consumers could be derailed by political and industry pressure
  • Offers provisional assessment of the effectiveness of the CFPB and consumer protection regulation
  • Gives readers unique access to insightful perspectives via on-the-record interviews with a cross-section of stakeholders, ranging from Richard Cordray (director of the CFPB) to public policy leaders, congressional staffers, advocates, scholars, and members of the press
  • Documents the historical and analytic narrative with more than 40 pages of end notes that will assist scholars, students, and practitioners

I would not describe the book as objective, given that Senator Elizabeth Warren wrote the forward and the President Obama’s point man on Dodd-Frank, Michael Barr, wrote the afterward. Indeed, it reads more like a panegyric. Nonetheless, the book has a lot to offer to scholars of the CFPB who are interested in hearing from the people who helped to stand up the Bureau.

Hockett on Postliberal Finance

Posted on by

Bob Hockett has posted Preliberal Autonomy and Postliberal Finance to SSRN. The abstract reads,

Even American Founders whose views diverged as dramatically as those of Jefferson and Hamilton shared a view of finance and of enterprise that one might call “productive republican.” Pursuant to this vision, financial and other forms of market activity are instrumentally rather than intrinsically good — and for that very reason are of interest to the public qua public rather than to the public qua aggregate of “private” individuals. Citizens are best left free to engage in financial and other market activities, per this understanding, only insofar as these are consistent with sustainable collective republic-making. And the republic — the res publica or “thing of the public” — for its part devotes many of its energies to the task of fostering and maintaining a materially independent republican citizenry. State and citizen are thus mutually constituting and mutually supporting, per this vision, and finance is important primarily in its capacity to nurture that symbiosis.

The productive republican view of finance can be illuminatingly contrasted with another view of more recent vintage, which one might call “liberal.” The liberal view takes market activity to be an intrinsic good, if not indeed a matter of inherent political-cum-moral right. Markets on this view are as it were natural social outgrowths of and aggregated counterparts to inherently “free” individual choices — choices that all of us, in both our individual and our collective capacities, are ethically bound to respect insofar as they don’t impose illegitimate costs upon others. So-called “public” interventions in “private” markets are accordingly fit subjects of suspicion and scrutiny per the liberal view. They are presumptively problematic unless and until proven otherwise, while “proof otherwise” for its part typically takes the form of proof that the intervention protects putatively pre-political freedom itself.

I claim in this article, a solicited symposium contribution, that American financial law, and economic law more generally, were once highly productive-republican in character, and that many financial, economic and, in consequence, political dysfunctions with which we have become familiar in recent decades stem from those laws’ having become steadily more liberal in character over time. I also argue that a number of essays, articles, and monographs published over the last twenty years or so under the rubrics of “banking the poor,” “alternative banking,” or “democratized finance” are, in effect if not self-conscious intention, attempts at partial recovery of the productive republican tradition — at least in the realm of finance. They are in this sense what might be called “post-liberal” in sensibility, if not quite in self-conscious aim. Their project can accordingly be aided, I aim to show, by affording them a form of reflective project-consciousness. That consciousness, however, once attained, will not be satisfied with post-liberal finance alone. It will demand a post-liberal economics.

This symposium piece is particularly compelling because it includes a personal story about Bob’s involvement with a “homeless kibbutz.” No spoilers, so you’ll have to read it yourself.