Posts Tagged ‘debtor-creditor law’

The folly of interest rate caps, cont’d

“A new proposal would likely sharply curtail the issuance of credit cards and the extension of unsubsidized credit to lower-income people.” Diego Zuluaga comments for the Cato Daily Podcast with Caleb Brown.

More: David Henderson, Peter Suderman, Todd Zywicki and Federalist Society podcast with Zywicki and Wayne Abernathy, and Alex Tabarrok and Tyler Cowen with pointers to papers. As we noted in February, a recent study of Arkansas’s constitutional 17% cap found it hurt borrowers of modest means, who now drive to other states to take out small loans.

A second podcast with Cato’s Todd Zywicki, this one noting that earlier rounds of regulation precipitated the withdrawal of banking services from many less well-off communities to which postal banking is now being touted as a solution:

Federal credit-reporting law may cover profs’ student recommendations

Now this is just bizarre: the federal Fair Credit Reporting Act is so loosely written that it may threaten professors with liability related to their writing of some student recommendations. In particular, the FCRA may apply if the recommendation ventures beyond direct experience, such as the student’s performance in class, to other pertinent information such as jobs the student may have held. In that case the professor or college might be legally obliged to furnish certain notices to students, which few or none currently do.

As a practical matter, because “the FCRA was designed to protect consumers from misconduct of credit bureaus and users of their information, it contains various protections that don’t fit well in the world of law school recommendations. For example, under 15 USC § 1681e, law schools would have to ask recipients of the recommendations (judges?) to certify certain things about their use of the information. Employers who based a decision at least in part on a recommendation would have to provide certain notices to the student, 15 USC § 1681m, after which students could obtain certain information from the school under 15 USC § 1681g. And so on.” [Jeff Sovern, Consumer Law and Policy]

Banking and finance roundup

December 5 roundup

  • “An important win for property owners”: Supreme Court rules 8-0 that protected species habitat doesn’t include tracts containing no actual dusty gopher frogs and not inhabitable by them absent modification [Roger Pilon, George Will, earlier on Weyerhaeuser v. U.S. Fish & Wildlife Service, Cato Daily Podcast with Holly Fretwell and Caleb Brown (“The Frog Never Had a Chance”)]
  • Proposed revision of federal Violence Against Women Act (VAWA) would expand definition of domestic violence to include nonviolent “verbal, emotional, economic, or technological” abuse. Vagueness only the start of the problems here [Wendy McElroy, The Hill]
  • Bad ideas endorsed by the American Bar Association, part 3,972: laws requiring landlords to take Section 8 tenants [ABA Journal; earlier on “source of income discrimination” laws]
  • Minneapolis “Healthy Foods Ordinance” drives up costs for convenience stores, worsens food waste, pressures ethnic grocers into Anglo formats [Christian Britschgi]
  • New York Attorney General-elect Letitia (Tish) James has been zealous about suit-filing in recent years, quality another matter [Scott Greenfield]
  • “Plaintiff wins $1,000 in statutory damages for technical violation of Fair Debt Collection Practices Act. (Debt collector illegally used the words ‘credit bureau’ in its business name.) After plaintiff’s lawyers seek $130k in fees, district court awards them the princely sum of $0. Fifth Circuit: Just so. While fees are ordinarily mandatory, ‘special circumstances’ obtain here: The record suggests that the plaintiff colluded with her lawyers to generate this ‘outrageous’ fee-heavy lawsuit in Texas instead of in her home state of Louisiana.” [John Kenneth Ross, IJ “Short Circuit” on Davis v. Credit Bureau of the South]

Bloomberg investigation: “confessions of judgment” and NY debt collection

In New York, unlike some other states, the law permits liberal use in business lending of a device called confession of judgment, in which borrowers “sign a statement giving up their right to defend themselves if the lender takes them to court.” Among the consequences: the lender may hold the wherewithal to seize the borrower’s assets unilaterally upon filing affidavits. Following the growth of lenders who advance cash to small businesses at extremely high interest rates, tens of thousands of business borrowers have experienced enforcement actions, often filed in upstate New York counties with little connection to either lender or borrower. Sharp practices? “In dozens of interviews and court pleadings, borrowers describe lenders who’ve forged documents, lied about how much they were owed, or fabricated defaults out of thin air.” [Zachary R. Mider and Zeke Faux, Bloomberg, in what is billed as the first of a series on the merchant cash advance industry] More: Scott Greenfield.

Banking and finance roundup

  • Using regulation to stomp political adversaries endangers rule of law: Gov. Cuomo directs New York financial regulators to pressure banks, insurers to break ties with National Rifle Association (NRA) [J.D. Tuccille, Reason]
  • My opinion piece on New Jersey governor’s scheme for a state bank has now escaped its WSJ paywall; WSJ readers respond [letters] And Sen. Kirsten Gillibrand [D-N.Y.] has now introduced a plan to get the federal government into retail banking via the post office [Daniel Marans, Huffington Post, quoting Gillibrand’s interesting claim that “Literally the only person who is going to be against this is somebody who wants to protect payday lender profits.”] More: Nick Zaiac on postal banking;
  • “From Kelo to Starr: Not Merely an Unlawful Taking but an Illegal Exaction” [Philip Hamburger on federal government’s acquisition of a dominant equity stake in AIG]
  • Court’s opinion on consumer debt contract formed in New York specifying Delaware law undermines “valid-when-made” doctrine that promotes liquidity of secondary debt market [Diego Zuluaga, Cato]
  • “Some blockchains, as currently designed, are incompatible with” the European Union’s General Data Protection Regulation [Olga Kharif, Bloomberg via Tyler Cowen]
  • And if you’re interested in the legal constraints holding back the extension of banking services to the cannabis industry, tune in to a Cato conference on that subject May 10.

Banking and finance roundup

  • “Unintended Consequences of Military Lending Act Hurt Some Families” [R.J. Lehmann]
  • Tenth Circuit: Fed must provide all depository institutiona access to the clearing system, whether they serve marijuana businesses or any other kind [George Selgin, Cato]
  • “Moneylending has been taboo for most of human history. So how did usury stop being a sin and become respectable finance?” [Alex Mayyasi, Aeon]
  • Financial regulation: too many cooks in the compliance kitchen [Cato Daily Podcast with Thaya Brook Knight and Caleb Brown] “DOL Fiduciary Rule: It’s Not Always Fun to be Right” [Knight]
  • “2016 was an unprecedented year in securities class actions filings.” [Baker Hostetler, JD Supra]
  • Trusts and the offshore wealth trade: from Edmund Burke to the Cayman Islands [Graham McAleer, Law and Liberty]

Banking and finance roundup