Consumer Protection

Consumer Protection

Research

James K. Glassman, J. W. Verret | Apr 16, 2013
A rule enacted by the Securities and Exchange Commission in 2003 required institutions to adopt and disclose policies for proxy voting that were intended to minimize conflicts between the institutions’ interests and those of their shareholders. An SEC staff interpretation of that rule led to a result almost the opposite of the ruling’s intent. Institutions could easily protect themselves from legal liability by shifting responsibility to proxy advisory firms, which acquired increasing power over corporate governance, to the detriment of shareholders.
Todd Zywicki | Jan 15, 2013
This paper describes the current economic and regulatory landscape for prepaid cards. The market appears to be robustly competitive, as recent years have seen declining costs and increasing functionality as well as entry of major players such as American Express and several large banks. Nor is there any evidence that consumers systematically err in the cards that they choose. Absent a demonstrable competitive market failure or systematic consumer abuse, prescriptive regulation of the terms and substance of prepaid cards would likely have unintended consequences that would exceed the benefits to consumers. On the other hand, there are some regulations that might be enacted that could promote competition and consumer welfare in this rapidly evolving market.
Todd Zywicki, Robert Sarvis | Jan 14, 2013
Government regulators proposing restrictions on specific forms of consumer credit all too often ignore the reality of how and why consumers use credit. They also ignore lenders’ legitimate reasons for pricing their services as they do; consumers’ legitimate reasons for choosing the financing options they do; the risks consumers face when credit offerings are made unavailable to them; and the many consumers who use the particular forms of consumer credit responsibly and effectively.
Todd Zywicki | Oct 01, 2012
In “The Consumer Financial Protection Bureau: Savior or Menace?” Todd Zywicki provides a short history of the CFPB and of consumer credit regulation in America, including many of the lessons researchers have learned from decades of bureaucratic design. The CFPB’s structure, as Zywicki notes, ignores many of these lessons. The paper outlines several known problems that often plague bureaucratic organizations and explains how the CFPB will be particularly vulnerable to these failings unless it sees significant reform.
Thomas Stratmann, J. W. Verret | Jun 01, 2012
The field of corporate governance has long considered the costs of the separation of ownership from control in publicly traded corporations and the regulatory and market structures designed to limit those costs.
Todd Zywicki, Nick Tuszynski | May 09, 2012
Regulators cannot wish away consumers’ need for credit, and eliminating access to overdraft protection will not correspondingly eliminate this need.

Testimony & Comments

Expert Commentary

Apr 23, 2013

Proxy season has begun, and it’s expected to be a hot one. More than half of publicly listed U.S. companies will hold annual meetings between now and the end of June. There will be votes on more than 200,000 questions, ranging from approving auditors to disclosing political contributions.
Jan 29, 2013

New mortgage rules released by the CFPB show why heightened oversight is necessary.
Dec 19, 2012

In a National Public Radio interview shortly before stepping down from the Securities and Exchange Commission last Friday, Chairman Mary Schapiro was asked about her greatest disappointment during her stint with the SEC. Ms. Schapiro responded that she wished that she had secured the ability for the commission to write its own budget without the input of Congress. Given the agency's track record, we should be happy that her wish did not come true.
Dec 05, 2012

At the end of this month, a federal deposit insurance program created during the crisis and extended by Dodd-Frank is scheduled to come to an end. Under the so-called TAG (transaction account guarantee) program, the Federal Deposit Insurance Corporation provides unlimited insurance for noninterest-bearing transaction accounts, such as business checking accounts. Fans of the program are asking for its renewal. Rather than allow TAG to become a lasting, troublesome feature of our already flawed deposit insurance regime, the program ought simply to expire as planned.
Nov 07, 2012

The country has spent the last year talking incessantly about who should be president and what that will mean for the country's future. And yes, it does matter who the president is. The president sets the rhetorical tone for the country, defines the nation's approach to foreign policy, lays out a domestic agenda, and selects the government officials to head the country's regulatory agencies. The truth is, however, that many of the government's decisions are made by people whose names will never appear on a ballot-agency staffers.
Sep 19, 2012

SEC Chairman Schapiro is handing the money market regulation baton to the Financial Stability Oversight Council, the members of which appear ready to take it up. Three weeks ago, the Securities and Exchange Commission had on its calendar a meeting to vote on a proposal to further regulate money market funds. Because three of Chairman Schapiro’s four fellow commissioners did not fall into line with her plan, she had to cancel the vote.

Experts

Podcasts

| May 02, 2012
On WOR Radio's The John Gambling Show, J.W. Verret explains that, despite rhetoric about helping the little guy, Dodd-Frank actually benefits the wealthiest Americans.

Media Clippings

Veronique de Rugy | Apr 26, 2012
Veronique de Rugy calls out cronyists.
Steven Horwitz | Apr 23, 2012
Steven Horowitz applies the parable of the broken traffic lights to the mortgage lending crisis.
Anthony B. Sanders | Mar 14, 2012
Antony Sanders says the results of the financial stress tests are a lot less scary than they seem.
Anthony B. Sanders | Mar 13, 2012
Anthony Sanders analyzes the results of the bank stress test.
Arnold Kling, Jeffrey Rogers Hummel | Feb 25, 2012
Work by Mercatus scholars is referenced in this Economist column.