The Bureau of Consumer Financial Protection (the Bureau) proposes a rule to prohibit mandatory arbitration agreements in consumer financial-product or service contracts. The Bureau bases its proposed rulemaking on findings from its 2015 study, which was mandated by Congress under Section 1028(a) of the Dodd-Frank Act.
In a new public interest comment for the Mercatus Center at George Mason University, University of Virginia law professor Jason S. Johnston, George Mason University law professor Todd J. Zywicki, and Mercatus Center senior policy writer Michael P. Wilt examine the Bureau’s proposed rule and findings, and they demonstrate that the Bureau’s data and analysis are often inconsistent, inadequate, and flawed.
Because of flaws in the methodology and data, the Bureau’s 2015 study should not be used as the basis for any regulatory proposal to limit the use of consumer arbitration. Furthermore, regulatory efforts to limit the use of arbitration will likely leave consumers worse off. A deeper analysis of the Bureau’s data shows that arbitration is, in reality, relatively fair and successful at resolving a range of disputes between consumers and providers of consumer financial products.
The Office of Science and Technology Policy (OSTP) has requested comments pertaining to the governance of artificial intelligence (AI) technologies. The Technology Policy Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge of the impact of regulation on society. It conducts careful and independent analyses employing contemporary economic scholarship to assess policy issues from the perspective of the public interest.
The Regulatory Studies Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge about the impact of regulation on society. As part of its mission, the program conducts careful and independent analyses that employ contemporary economic scholarship to assess regulations and their effects on the economic opportunities and the social well-being available to all members of American society.
My name is Adam Thierer, and I am a senior research fellow at the Mercatus Center at George Mason University, where I study technology policy. Along with other Mercatus Center scholars, I have conducted extensive research on the questions raised in the NTIA’s Internet of Things (IoT) proceeding. Accordingly, I am pleased to submit for the record two recently published Mercatus Center articles. The first article is a compendium of statistics on the economic impact of the IoT and wearables that I coauthored with Andrea Castillo. The second is a law review article I authored for the Richmond Journal of Law and Technology last year.
The recent rise of “FinTech”—the use of technology to provide financial services in innovative ways—has the potential to significantly change how consumers access financial services. These changes are pressuring existing regulatory structures and norms, and they are creating concern that regulators will hamper needed modernization or fail to prevent a harmful destabilization of the financial system. I commend the OCC for acknowledging that its existing model for regulation could be improved to better match the needs of the current market and for providing an initial framework for how it plans to address innovation within its jurisdiction.
The case examined here is the package of regulations that met the initial legal requirements provided by the Nutrition Labeling and Education Act of 1990 (NLEA, Public Law 101-535). This act gave the FDA the authority to require nutrition labeling of most foods regulated by the Agency and to require that all nutrient content claims (e.g., “high fiber” or “low fat”) and health claims be consistent with agency regulations.
The OECD hopes that the new reporting standards will provide tax administrators with useful information to more effectively direct auditors while making it easier to identify artificial profit shifting to tax-advantaged environments. This public comment will argue that the accounting costs of country-by-country reporting will be larger than the Department of the Treasury’s revenue gains and that there will be even higher unanticipated costs from inadvertent disclosures of sensitive information. Because the costs of information centralization will be greater than the benefits, we recommend that the IRS should not implement the proposed regulation on country-by-country reporting. This recommendation is informed by a recent paper from the Mercatus Center at George Mason University that explains key features of the international corporate tax system, the changes the OECD wants to make, and the potentially far-reaching consequences of those changes. The study also provides recommendations to improve corporate taxation without compromising state sovereignty or taxpayer rights.
Ill-considered regulation regarding algorithmic trading will adversely affect the ability of legitimate market participants to contribute to liquidity, price discovery, narrow spreads, and low trading costs. The CFTC shares with market participants a growing interest in algorithmic trading and its potential effects on the markets. Rather than working with market participants cooperatively, the Commission proposes a prescriptive regime applicable to virtually any firm that trades in the futures (and swaps) markets. If finalized, this proposal will establish an approach dominated by enforcement that will chill firms’ willingness to work with the Commission to address emerging problems in the area. In addition, by opening firms’ source code to unlimited inspection by the Commission and others, the proposal creates dangerous vulnerabilities for an asset of utmost importance to trading firms.
Whatever the justification behind licensing in the past, its rationale is disappearing as technology provides new solutions to old problems. This meeting is an opportunity for policymakers to reevaluate traditional regulations aimed at addressing information deficiencies and allow technological innovation to do what regulation could not: improve consumer welfare while encouraging innovation and economic growth.
While higher capital requirements can reduce the likelihood of banking crises, I would like to raise two key issues concerning the proposed policy statement: 1) bank subsidiary capital requirements may be more effective than holding company capital requirements, and 2) the benefit-cost analysis used to analyze the rule could be improved by adding other dimensions to the analysis.
Central banks' part in the Great Recession, and the lackluster recovery since, are reviving interest in monetary rules. That revival raises crucial questions. Might the Federal Reserve and other central banks have performed better if they’d adhered to monetary policy rules? Could rules have avoided the crisis altogether? Can they avoid future crises? If so, which rules work best? Can a monetary policy rule work even in a world of near-zero, or negative, interest rates?
Rebounding after disasters like tsunamis, hurricanes, earthquakes, and floods can be daunting. How do residents of these communities gain access to the resources they need to rebuild while overcoming the collective action problem that characterizes post-disaster relief efforts?
Please join the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University for a panel discussion featuring Hayek Program Senior Fellow Virgil Storr and his new book Community Revival in the Wake of Disaster: Lessons in Local Entrepreneurship.
As the world’s first decentralized digital currency, Bitcoin has the potential to revolutionize online payment systems and commerce in ways that benefit both consumers and businesses. Individuals can now avoid using an intermediary such as PayPal or submitting credit card information to a third party for verification—both of which often involve transaction fees, restrictions, and security risks—and instead use bitcoins to pay each other directly for goods or services.