Credit Should be Regulated Like Toasters

07 Dec Credit Should be Regulated Like Toasters

Credit should be inspected and regulated like toasters, toys and meat so American consumers can count on safe mortgage loans and credit cards, Harvard Law Professor Elizabeth Warren and New York University Law Professor Oren Bar-Gill conclude in their recent 102-page research paper, Making Credit Safer. They advocate for a new federal regulator to police the safety of consumer credit.

Ineffective credit regulation has left consumers with unsafe financial products, leading to financial distress, foreclosure, bankruptcy, and the subprime mortgage crisis, the professors conclude. It is impossible to buy a tangible good with a one-in-five chance of catching fire, yet Professor Warren says consumers have a one-in-five chance of losing their home to mortgage foreclosure without so much as a disclosure before the loan is made.

Senator Richard Durbin, D-IL, introduced a bill in Congress this fall to create the Consumer Credit Safety Commission.

Professor Warren is an expert in bankruptcy and consumer credit, and is a prolific writer. She is the author of “The Vanishing Middle Class” in Ending Poverty in America: How to Restore the American Dream 38 (The New Press, 2007), and “Unsafe at Any Rate,” 8 DEMOCRACY: A Journal of Ideas (2007). She has been appointed chairwoman of the panel to oversee the federal economic bailout.

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Jill Michaux has helped Kansas consumers with debt problems for three decades. She and her partner, Mark Neis, are Topeka's only bankruptcy specialists, board certified in consumer bankruptcy law by the American Board of Certification. She help start the National Association of Consumer Bankruptcy Attorneys.
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