Guest: Todd Zywicki
Following the Great Recession of 2007-2008, regulators jumped at the opportunity to "remedy" (i.e., regulate) perceived market failures in credit markets. Although government-sponsored enterprises like Fannie Mae were responsible for many of the bad loans that created the crisis, politicians alleged it was the free market and payday lending that needed to be reined in. The 2011 Dodd-Frank Act increased regulators' responsibilities, and even gave rise to a new agency – the Consumer Financial Protection Bureau. As the first appointee of the agency's "Consumer Advisory Board," Elizabeth Warren became known as a savior of sorts for victims of so-called "predatory lending." But do these laws, bureaus, and advisory boards protect or harm consumers? In this episode, Bob's guest is George Mason University Law School professor Todd Zywicki, one of Warren's most knowledgeable and outspoken critics. Zywicki and his co-authors recently finished a detailed study on this topic, "Consumer Credit and the American Economy." Listen to learn how the public has been misled about the costs, benefits, uses, and abuses of consumer debt.
Update [10/19/14]: Todd Zywicki writes a post at the Volokh Conspiracy blog about the NYT Editorial on capping interest rates on consumer credit brought up by Bob and his caller during the show.
Click here to read Todd's commentary.
Click here to read the NYT Editorial, "A Rate Cap for All Consumer Loans", published 10/18/14.