More Reasons to Think Consumer Protection Doesn’t Hurt Banks (Could It Even Help?)

by Jeff Sovern

As is well known, opponents of consumer financial protection regulation often argue that the regulation will reduce the availability of credit and raise its price.  Despite such claims and the increased consumer credit regulation in 2009''s Crerdit CARD Act and 2010's Dodd-Frank Act, today's NY Times reports Rising Bank Profits Tempt a Push for Tougher Rules. According to the article, "analysts think the banks’ first-quarter profits will be their best ever." While we don't know whether the profits would have been higher in the absence of regulation, it seems clear that at least at this point, regulation is not preventing the banks from thriving.  Of course, we also know how they did before those laws were enacted.  Anyone remember Bear Stearns, Lehman Brothers, Countrywide, etc.?

And what about the price of credit?  Well, according to the NY Daily News, Credit cards are offering lower interest rates and higher cash back bonuses to  those with good credit. The article explains that those with good credit are benefiting from "lower interest rates and more robust sign-up bonuses, according to a new report  from" Again, we can't know what would have happened if Congress hadn't acted, but certainly it is hard to argue that those with good credit are finding credit less available or more expensive.  The article points out that those with bad credit are having a different experience, but even so, the articles undermine the tired old industry argument against regulation. 

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