February Responses
posted by University of Pennsylvania Law Review
PENNumbra’s featured works are now available at www.pennumbra.com. This issue contains responses to an article from the print edition of the Law Review.
Richard Lawless and Ronald Mann respond to Oren Bar-Gill and Elizabeth Warren’s Making Credit Safer, 157 U. PA. L. REV. 1 (2008). Making Credit Safer begins by noting that, while physical products, from toasters to toys, are routinely inspected and regulated for safety, credit products, like mortgage loans and credit cards, are left largely unregulated, even though they can also be unsafe. Because financial products are analyzed through a contract paradigm rather than a products paradigm, consumers have been left with unsafe credit products. Bar-Gill and Warren use the physical-products analogy to build a case, supported by both theory and data, for comprehensive safety regulation of consumer credit and propose a fundamental restructuring of this current regulatory regime, urging the creation of a new federal regulator that will have both the authority and the incentives to police the safety of consumer credit products.
Professor Lawless, in his Response, The Limits of Contract as Product, challenges Bar-Gill and Warren’s initial assumption that consumer credit contracts should be viewed as products rather than contracts. While agreeing that some aspects of consumer credit contracts do resemble products, these contracts also contain other elements, and Lawless thus asserts that “[o]nce we shift our attention to these other elements, . . . our classification of these contracts as products explodes.” Additionally, Lawless raises the issue of regulatory capture, maintaining that Bar-Gill and Warren’s suggested new agency could be particularly subject “to interest-group manipulation, as the regulator’s broad discretion would give them cover to justify most any regulatory regime.”
Professor Mann, in his Response, Unsafe at any Price?, questions Bar-Gill and Warren’s “link between the imperfection of consumer credit markets and the policy response of a government agency with a broad and general mandate to eliminate ‘unsafe’ products.” His primary concern is that a broadly powered federal agency may not, “in the long run, effectively advance the interests of consumers.” In order to address the market imperfections described by Bar-Gill and Warren, Mann argues that such an agency would need more than broad power and a vague statutory mandate to avoid the dangers of ineffective response.
February 2, 2009 at 3:00 pm
Posted in: Law Rev (Penn)
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