Class Thirty: December 4, 2014

In today’s class, we will focus on several different regulatory techniques for addressing problems of consumer finance. We will start with regulatory interventions that impose statutory defaults from which consumers must affirmatively opt-out. To introduce this subject, please read Part II of Lauren E. Willis, When Nudges Fail: Slippery Defaults, 80 U.Chi. L. Rev. 1155 (2013), focusing on her case study of checking-account overdrafts. We will then take up the CFPB’s UDAAP authority, which is summarized in Final CFPB UDAAP Power Research Paper of December 2013. Finally, we will consider the CFPB’s recent proposal to regulate Pre-Paid Cards. This proposal is summarized in CFPB Proposes Strong Federal Protections for Pre-Paid Cards (Nov. 13, 2014). After you’ve reviewed this summary, please also take a look at the Bureau’s analysis of the proposal’s benefits and costs, which runs from page 574 to page 671 of the Notice of Proposed Rulemaking for Prepaid Accounts under the Electronic Funds Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) (Nov. 2014).. Do the benefits of the proposal outweigh the costs? At the conclusion of today’s class we will also discuss two additional areas of potential CFPB intervention: Payday lending and auto lending. Please review the research papers on these two subjects.