What are you looking for?

Showing 9 of 110 Results in Payments & Payment Networks

The CFPA’s Effect on Consumer Credit and A Wager Proposal for Professor Levitin

TOTM Professor Adam Levitin is not impressed by our prediction of the effect on consumer credit of the CFPA.  Readers might recall that, using estimates from . . .

Professor Adam Levitin is not impressed by our prediction of the effect on consumer credit of the CFPA.  Readers might recall that, using estimates from the literature on the effect of regulatory shocks on interest rates and of the long-term debt elasticity, we offered a (in our words) “rough calculation” of the “lower bound” of the effect of the CFPA Act on consumer credit at 2.1%.  Professor Levitin says that we just “make up the numbers” and that they do not pass the “straight-faced test.”  In his paper (and second blog post) Professor Levitin offers more of the same formula: a combination of assertions unsupported by evidence, ad hominem attacks, and insistence to his prior assumption that the CFPA will reduce the cost of credit without imposing serious regulatory costs (again, without substantiation).  He writes that his real problem with our analysis is that “The key point here, however, is the impact of the legislation is speculative and certainly not susceptible to precise statistical predictions.”

Read the full piece here

Continue reading
Financial Regulation & Corporate Governance

Response to Steve Salop on credit card antitrust

TOTM Steve’s post responding to me and Josh on antitrust exemptions and buyer cartels raised a number of interesting issues.   A few points in response… Read . . .

Steve’s post responding to me and Josh on antitrust exemptions and buyer cartels raised a number of interesting issues.   A few points in response…

Read the full piece here.

Continue reading
Antitrust & Consumer Protection

What Am I Missing About Antitrust Exemptions?

TOTM Geoff mentions the pending bills on the Hill that would grant merchants an antitrust exemption to negotiate interchange fees.  The insurance industry exemption has also . . .

Geoff mentions the pending bills on the Hill that would grant merchants an antitrust exemption to negotiate interchange fees.  The insurance industry exemption has also been in the news of late in the wake of the Democrats’ threats of repeal.  Here’s what I’m puzzled about.  Other than self-interested parties that have a lot to gain from an exemption (I’d like an exemption from income taxes if anybody cares), why won’t anybody say that industry exemptions from the Sherman Act price-fixing prohibitions are decidedly not a good thing for consumers?

Read the full piece here.

Continue reading
Antitrust & Consumer Protection

Don’t Kill Credit

TOTM My co-author on this paper on The Effect of the CFPA Act of 2009 on Consumer Credit, David Evans, has a great post over at . . .

My co-author on this paper on The Effect of the CFPA Act of 2009 on Consumer Credit, David Evans, has a great post over at Catalyst Code on the importance of access to consumer credit during tough financial times.  Here’s the key paragraph…

Read the full piece here.

Continue reading
Financial Regulation & Corporate Governance

Don’t kill interchange fees

TOTM Speaking of Josh’s co-author, David Evans,  David just testified the other day before the House Financial Services Committee on a bill, the Welch Bill, HR . . .

Speaking of Josh’s co-author, David Evans,  David just testified the other day before the House Financial Services Committee on a bill, the Welch Bill, HR 2382, that would regulate the fees banks charge to each other to process credit card payments.  The Welch Bill is actually only one of three pending bills that would regulate interchange fees (the other two offer antitrust exemptions for merchants to negotiate these fees. Because we all know how good antitrust exemptions are).

Read the full piece here.

Continue reading
Financial Regulation & Corporate Governance

Three Problematic Truths About the Consumer Financial Protection Agency Act of 2009

Scholarship Abstract The creation of a new Consumer Financial Protection Agency (“CFPA”) is a very bad idea and should be rejected. The proposal is not salvageable . . .

Abstract

The creation of a new Consumer Financial Protection Agency (“CFPA”) is a very bad idea and should be rejected. The proposal is not salvageable and cannot be improved in substance or in form. The foundational premise of the CFPA is that a failure of consumer protection, and specifically irrational consumer behavior in lending markets, was a meaningful cause of the financial crisis and that the CFPA would have or could have averted the crisis or lessened its effects. To the contrary, there is no evidence that consumer ignorance or irrationality was a substantial cause of the crisis or that the existence of a CFPA could have prevented the problems that occurred. The CFPA is likely to do more harm than good for consumers. In this article, we highlight three fundamentally problematic truths about the CFPA: (1) The CFPA is premised on a flawed understanding of the financial crisis, (2) the CFPA will have significant unintended consequences, including but not limited to reducing competition, consumer choice, and availability of credit to consumers for productive uses; and (3) the CFPA creates a powerful bureaucracy with undefined scope, risking expensive and wasteful regulatory overlap at both the federal and state levels without any evidence of its own expertise in the core areas it is designed to regulate.

Continue reading
Financial Regulation & Corporate Governance

Nudge

TOTM Sunstein and Thaler have a series of posts over at Volokh Consipiracy on their new book Nudge, which expands on their notion of libertarian paternalism . . .

Sunstein and Thaler have a series of posts over at Volokh Consipiracy on their new book Nudge, which expands on their notion of libertarian paternalism (see here, here , here and here).  Something in the most recent post caught my eye.  In preparing to respond to various objections to libertarian paternalism, Sunstein argues that this sort of paternalism offers the “best of both worlds”…

Read the full piece here

Continue reading
Financial Regulation & Corporate Governance

Radiohead revisited

TOTM I started writing this as a comment to Josh’s last post, but it got so long I figured I’d make a post out of it.  . . .

I started writing this as a comment to Josh’s last post, but it got so long I figured I’d make a post out of it.  Thanks for the inspiration, Josh.

I really hope Radiohead releases the data on its little experiment!  My prediction: They will receive an average price of $2 and a median price of $0.

Read the full piece here

Continue reading
Financial Regulation & Corporate Governance

Behavioral Law and Economics of Contracts

TOTM After receiving the page proofs last week, I’m posting “Behavioral Law and Economics, Paternalism, and Consumer Contracts: An Empirical Perspective” to SSRN. I wrote this . . .

After receiving the page proofs last week, I’m posting “Behavioral Law and Economics, Paternalism, and Consumer Contracts: An Empirical Perspective” to SSRN. I wrote this paper for last year’s NYU Journal of Law & Liberty Symposium on Behavioral Economics™ Challenge to the Classical Liberal Program. The basic idea of the paper is an evaluation of the empirical evidence concerning behavioral and neoclassical theoretical predictions in a few settings where behavioral anomalies are frequently argued to justify paternalistic measures: credit cards, standard form contracts, and shelf space contracts.

Read the full piece here.

Continue reading
Financial Regulation & Corporate Governance