“This July, Consumers’ Research will host its 2nd annual workshop at Bretton Woods. The focus of this intimate workshop will be on consumer protection. We intend to develop guiding principles on consumer protection based on the input and expertise of representatives from relevant legislative, regulatory, and enforcement bodies, as well as a diverse array of fintech, traditional financial industry, and blockchain experts.”
– Joe Colangelo, Executive Director
On November 29, 2018, Consumers’ Research hosted a panel discussion exploring the various definitions of “consumer protection” and “consumer welfare,” the evolution of the contemporary consumer protection paradigms, the impact of regulation and enforcement actions on consumer welfare, the role of competition in consumer welfare, the intersection of consumer and corporate interests, the role of technology in financial access and inclusion, and the importance of data and empirical support in consumer protection policy and regulation.
- Todd J. Zywicki — George Mason University Foundation Professor of Law at GMU’s Antonin Scalia Law School.
- Janis K. Pappalardo — Assistant Director for Consumer Protection in the Bureau of Economic Affairs at the U.S. Federal Trade Commission
- Christopher L. Peterson — John J. Flynn Endowed Professor of Law at the University of Utah’s S.J. Quinney College of Law
- Thomas W. Miller, Jr. — Professor of Finance and Jack R. Lee Chair of Financial Institutions and Consumer Finance at Mississippi State University
In 2005, Congress passed a law preventing all student loans from being discharged in bankruptcy. Since then, the cost of attending college – and the average student loan size – has exploded.
The government issues nondischargeable loans with minimal requirements to both students and their parents. Unlike typical consumer lending, there is no underwriting, risk retention, or loan-to-value requirements. Loans are granted regardless of the student’s projected salaries, debt-to-income ratio, or ability to repay post-graduation. This leaves students and parents with relatively minimal consumer protections compared to loans for other products, such as cars or homes. Consequently, education providers are not required or incentivized to ensure the degree they provide will earn the student enough additional income to pay back the loan.
Most education finance reformers focus on loan forgiveness or free college, but if an oversupply of easy credit in education is a problem, those reforms only mask the problem’s symptoms. Instead, maybe the solution is to apply the same type of protections used in the consumer financial services industry to the student loan industry.
Join us Wednesday, August 19, at 11 a.m. EDT as we examine the disparity of protections between consumer and education finance and discuss whether student borrowers are sufficiently protected.
Mercatus Center at George Mason University
Director of Innovation and Governance and Senior Research Fellow
Tom Miller, Jr., PhD.
Mississippi State University College of Business
Jack R. Lee Chair of Financial Institutions and Consumer Finance
Bob Stein, CFA
Deputy Chief Economist
Director of the Center for Educational Freedom
In 2014, the House Oversight Committee issued a report on Operation Choke Point, a controversial 2013 collusion between the Department of Justice (DOJ) and the Federal Deposit Insurance Corporation (FDIC). The report concluded that the actions of the DOJ and the FDIC “forced banks to terminate relationships with a wide variety of entirely lawful and legitimate merchants.” While the DOJ and FDIC documents referenced in the report point to bank “reputational risk” as the justification of the initiative, officials from the FDIC and DOJ failed to consider the unintended consequences of the program on consumers. Ironically, both agencies ended up damaging their own reputations by politicizing their mandates.
By forcing banks to terminate relationships with companies Choke Point participants deemed unsavory, such as pawnbrokers or fireworks dealers, lawful, popular businesses lost access to banking and shuttered. Some of the banks that relied heavily on revenue from those businesses closed and consumers lost access to legitimate businesses and banking services, including short-term lending and independently operated ATMs.
Operation Choke Point was an unprecedented program. In their zeal to take on legal, but personally disliked businesses, unelected, unaccountable DOJ and the FDIC officially harmed consumers by taking goods off shelves and forcing legitimate business to close. However, just a few years removed from government actions, banks seemed to have internalized this regulatory overreach and are increasingly deciding what businesses should and should not have access to banking services based on political calculations.
In their paper, Private Policies and Public Power: When Banks Act as Regulators within a Regime of Privilege, authors Brian Knight and Trace Mitchell examine this current trend and ask “whether this public power, granted to banks for the purposes of facilitating lawful commerce, is being misused when banks try to regulate downstream markets through withholding services and what, if anything, should be done to address these actions by banks.”
On October 7th from 12:00PM – 1:00PM, Consumers’ Research invites you to join Executive Director Will Hild and Brian Knight, Senior Research Fellow and Director of Innovation and Governance for a one on one lunch and learn discussing Brian’s findings and the trends that could affect future of consumer banking.
- Will Hild
- Brian Knight
Mercatus Center at George Mason University
Director of Innovation and Governance and Senior Research Fellow
In the 1970s, antitrust law was a miasma of nebulous social and economic rulings. Companies rarely knew with certainty beforehand whether a merger or acquisition would run afoul of federal enforcement. Then came Judge Robert Bork.
Beginning with his book, The Antitrust Paradox, he articulated and defended a clear, objective standard that would become the guiding doctrine in U.S. antitrust enforcement. Bork argued that the highest focus of antitrust enforcement actions and rulings should be the effects on the consumer, rather than the myriad and less quantifiable effects on other corporate actors. Rather than looking at the size and structure of the market as an end, antitrust policy became focused almost entirely on the question “What makes consumers better off?”- commonly known as the Consumer Welfare Standard.
But today, with the rise of trillion-dollar corporations, “Big Tech,” and a growing concern that companies are no longer acting in the consumer interest, a 1970’s style of antitrust fever has begun returning to Washington.
Even with the U.S. the most politically divided it has been in modern history, leadership in both parties are calling for stricter antitrust enforcement actions. Republican President Donald Trump’s Department of Justice has just sued Google, alleging that the company’s famous search engine is a monopoly. Meanwhile, the House Committee on the Judiciary chaired by Democrat Jerrold Nadler has issued a report calling for sweeping changes to reform antitrust law.
So what does this all mean for consumers? Should the Consumer Welfare Standard be discarded? Join Consumers’ Research for a discussion on the pros and cons of the changing antitrust framework with two of the most well-regarded experts on the subject, Joshua Wright, University Professor and Executive Director, Global Antitrust Institute at Scalia Law School at George Mason University, and Ashley Baker, Director of Public Policy at Committee for Justice.
Director of Public Policy
Committee for Justice
University Professor and Executive Director, Global Antitrust Institute
Scalia Law School at George Mason University
About our Speakers:
Ashley Baker is the Director of Public Policy at the Committee for Justice. Her focus areas include the Supreme Court, judicial nominations, technology and regulatory policy. Her writing has appeared in Fox News, The Hill, USA Today, RealClearPolitics, The Daily Caller, The American Spectator, and elsewhere. Most recently, Ashley has worked to form a new coalition of groups, the Alliance on Antitrust, which was established to address calls to move away from the consumer welfare standard by weaponizing the law, which would leave consumers and conservatives worse off. As an expert on the judicial confirmation process, Ms. Baker worked closely on efforts related to the confirmations of Justices Gorsuch and Kavanaugh, and has served as a speaker on the topic for RNLA. Most of Ashley’s work is at the intersection of the courts, regulation, and technology. Ashley engages in policy and legal analysis and outreach on legislation and regulations related to these issues by writing op-eds, letters to Congress for committee hearings, and regulatory comments to a broad array of executive agencies including the FTC, NTIA, FCC, EPA, DOL, SEC, and the DOJ Antitrust Division. Ashley is an active member of the Federalist Society, where she serves as an expert on the Regulatory Transparency Project’s working groups on Antitrust and Consumer Protection and Cyber and Privacy.
Joshua D. Wright is University Professor and the Executive Director of the Global Antitrust Institute at Scalia Law School at George Mason University. Professor Wright also holds a courtesy appointment in the Department of Economics. In 2013, the Senate unanimously confirmed Professor Wright as a member of the FTC. He rejoined Scalia Law School as a full-time faculty member in 2015. Professor Wright is a leading scholar in antitrust law, economics, intellectual property, and consumer protection, and has published more than 100 articles and book chapters, co-authored a leading antitrust casebook, and edited several book volumes. He was awarded the Paul M. Bator Award by the Federalist Society in 2014. Wright previously served the FTC in the Bureau of Competition as its inaugural Scholar-in-Residence. Wright’s return to the FTC as a Commissioner marked his fourth stint at the agency, after having served as an intern in both the Bureau of Economics and Bureau of Competition.
Are faulty statistics covering up growing problems for the average American consumer? Can consumers trust the US government’s inflation reports? From hedonic adjustment to substitution bias to seasonal adjustment, the Consumer Price Index (the CPI) includes numerous modifications to the underlying price data. Most consumers have probably never even heard of the CPI, much less taken time to consider how its calculated, but they have certainly seen prices go up during their lifetimes. How much they have gone up is the topic of our next conversation.
Enter Oren Cass, Executive Director of American Compass. Last year, Oren published a pivotal report detailing the problems with how we calculate and think about consumer inflation. He argues the CPI does not tell the real story about the rising costs of achieving the American Dream. He recommends we adopt a “Cost of Thriving” index as another important lens for understanding what is happening in the economy.
Join us at noon on February 24 for a discussion with Oren of maybe the single most important number for consumers. We will discuss problems with how inflation is calculated, the reasons consumers should be concerned about these flaws, and what they can do about it.
Oren Cass is the executive director of American Compass and author of The Once and Future Worker: A Vision for the Renewal of Work in America (2018). He is a contributing opinion writer for the Financial Times and his work also appears regularly in publications including the New York Times and the Wall Street Journal.
From 2005 to 2015, Oren worked as a management consultant in Bain & Company’s Boston and Delhi offices. During this period, he also earned his J.D. magna cum laude from Harvard Law School, where he was elected vice president and treasurer of the Harvard Law Review and oversaw the journal’s budget and operations. While still in law school, Oren also became Domestic Policy Director for Governor Mitt Romney’s 2012 presidential campaign, editing and producing the campaign’s “jobs book” and developing its domestic policy strategy, proposals, and research. He joined the Manhattan Institute as a senior fellow in 2015 and became a prolific scholar, publishing more than 15 reports for MI and editing its popular “Issues 2016” and “Issues 2020” series, testifying before seven congressional committees and speaking on dozens of college campuses. He founded American Compass at the start of 2020.
Near the close of Director Kathy Kraninger’s term as head of the Consumer Financial Protection Bureau (CFPB), the agency published a comprehensive report from the Taskforce on Federal Consumer Financial Law, a capstone to her tenure as Bureau Director.
Created in January of 2020 and Chaired by Todd Zywicki, the Taskforce examined ways to harmonize and modernize federal consumer financial laws. Kraninger gave the Taskforce a year to submit a report of their findings and recommendations.
The group focused on the enumerated consumer credit laws and the implementing regulations for those laws, as well as gaps in knowledge that should be addressed through research. It also identified ways to improve consumer understanding of markets and products and potential conflicts or inconsistencies in existing regulations and guidance.
The comprehensive report could be a step in the right direction to depoliticize and reform the agency in a way that will best address consumers’ financial problems. However, at the confirmation hearing for Rohit Chopra, President Biden’s pick to succeed Kraninger, the Taskforce report went entirely unmentioned.
Consumers’ Research Senior Research Fellow, Professor Tom Miller, Jr., noticed the Senate [Banking?] Committee’s unfortunate disregard for the work of the Taskforce during their questioning of Mr. Chopra. In a Real Clear Policy oped, Professor Miller touted the Taskforce Report and implored individual Senators to question Mr. Chopra on whether he will commit to overseeing an agency dedicated to solid empirical research.
The largest set of recommendations in the Taskforce’s report involve research. In particular, the report highlights issues where knowledge has been forgotten, questions remain unanswered, and areas where generally accepted knowledge proves to be false.
On Friday, April 9, 2021, we invite you to join Consumers’ Research for a webinar featuring Taskforce Chairman Zywicki and Professor Miller discussing the CFPB’s Taskforce report and the dire need for more research in the area of consumer finance.
Todd J. Zywicki is a George Mason University Foundation Professor of Law at George Mason University Antonin Scalia School of Law. He is also a Senior Fellow of the Cato Institute’s Center for Monetary and Financial Alternatives and one of the authors of Consumer Credit and the American Economy.
Tom Miller, Jr. is a Professor of Finance and inaugural holder of the Jack R. Lee Chair in Financial Institutions and Consumer Finance at Mississippi State University. He is also a Senior Research Fellow at Consumers’ Research and the author of How Do Small-Dollar, Nonbank Loans Work?
The webinar will be moderated by Brian Knight, Director of Innovation and Governance and a Senior Research Fellow at the Mercatus Center and author of The Sandbox Paradox: Balancing the Need to Facilitate Innovation with the Risk of Regulatory Privilege.
About our Speakers:
Todd J. Zywicki
Todd J. Zywicki is a George Mason University Foundation Professor of Law at George Mason University School of Law, Senior Fellow at the Cato Institute’s Center for Monetary and Financial Alternatives, Senior Scholar of the Mercatus Center at George Mason University, and Senior Fellow at the F.A. Hayek Program for Advanced Study in Philosophy, Politics and Economics.
In 2021, Zywicki was elected to be a Fellow of the American College of Consumer Financial Lawyers after spending a year as the chair of the CFPB’s Consumer Taskforce on Federal Consumer Financial Law. In 2009, he was the recipient of the Institute for Humane Studies 2009 Charles G. Koch Outstanding IHS Alum Award. He has served as Co‐Editor of the Supreme Court Economic Review since 2006 and as Editor from 2001–2002. From 2003–2004, Professor Zywicki served as the Director of the Office of Policy Planning at the Federal Trade Commission.
Tom Miller, Jr.
Tom Miller, Jr. is a Senior Research Fellow at Consumers’ Research. He is a Professor of Finance and inaugural holder of the Jack R. Lee Chair in Financial Institutions and Consumer Finance at Mississippi State University. With its focus on Consumer Finance, notably installment credit products, the Lee Chair is the first of its kind. He currently serves as a member of the Academic Research Council at the Consumer Financial Protection Bureau.
Professor Miller has several ongoing research projects on various topics in small-dollar loans. His current research now includes projects on payday loans and on small-dollar installment loans.
Miller is a frequent speaker at national conferences and conventions. His overall topics generally focus on the value to consumers of maintaining access to small-dollar credit products, the value of competition in small-dollar credit products, and educating policymakers about how small-dollar credit products work.
Miller has had, and maintains, a long-standing interest in derivative securities and investments. He has published numerous scholarly peer-reviewed articles on various topics in derivative securities. In addition, he is the author of How Do Small-Dollar Nonbank Loans Work? and co-author (with Bradford D. Jordan and Steve Dolvin) of Fundamentals of Investments: Valuation and Management, 9th ed. (McGraw-Hill/Irwin). He is also co-author (with David Dubofsky) of Derivatives: Valuation and Risk Management (Oxford University Press).
Miller received his Ph.D. in finance from the University of Washington (Seattle) and his Bachelor’s and Master’s degrees in applied economics from Montana State University. In his off hours, he enjoys playing jazz and blues on the tenor saxophone.
Brian Knight is the Director of Innovation and Governance and a Senior Research Fellow at the Mercatus Center at George Mason University.
Brian’s research focuses on numerous aspects of financial regulation, including the creation of pro-innovation regulatory environments, the role of federalism in fintech regulation, the use of digital assets for financial transactions, the role of regulation for credit markets and consumer protection, and the provision of capital to businesses.
Prior to joining Mercatus, Brian worked for the Milken Institute, where he headed up the FinTech and Capital Access programs. He has experience working for a broker-dealer with a focus on the emerging online private-placement market and was the co-founder of CrowdCheck, a company providing due-diligence and disclosure services to companies and intermediaries engaged in online private offerings.
Brian received his law degree from the University of Virginia and his bachelor’s degree from the College of William and Mary.