Law and Economics of Consumer Finance

Abstract

This survey of the law and eco nomi cs of co ns umer financ e di sc usses economic mode ls of consum er lending and evaluates the major consumer finance laws in light of them, We focu s on usury laws; restrictions on creditor remedies, such as the ban on ex pansive security interests; bankruptcy law ; limitations on third-party defenses, such as the holder-in-due-co urse doctrin e; information disclosure rules, including the Truth in Lending Act; and antidi sc rimination law, We also discuss the e mpirical literature,

Irreversible and Catastrophic

“…115 certainly be both wealthier and more knowledgeable than the present generation; for this reason, they will be in a far better position, and possibly an unimaginably better position, to handle environmental problems that materialize in their time. 117 In the view of one commentator, the nearly inevitable increase in wealth over time means that it "makes no sense to make current generations 'pay' for the problems of future generations." 118 In addition, expensive investments in greenhouse gas reduction may well diminish available resources for future generations, leaving them with less "to devote to subsequent damage control."…”

Predictably Incoherent Judgments

“…There are, however, problems with this approach, akin to those discussed in the context of punitive damages: information overload, framing, and manipulation. 117 People can process a small set of cases, but any such set risks framing effects; a full range of cases, sufficient to overcome those effects, might overload people's cognitive capacities. It is not clear that this modest reform could ultimately succeed.…”

Entry Policy in Local Telecommunications: Iowa Utilities and Verizon

“…The threat of entry itself might be significantly altering incumbent incentives and market prices. Similarly, the fact that many CLECs have entered and failed-more than 50 CLECs are reported to have filed for bankruptcy 117 -does not tell us much either. It would make no more sense to say that a drug company wasted the first ninetynine petri dishes when it turned out that the new blockbuster drug was in the hundredth dish.…”