Modes of Credit Market Regulation
Michael S. Barr
University of Michigan Law School
BUILDING ASSETS, BUILDING WEALTH; CREATING WEALTH IN LOW-INCOME COMMUNITIES, N. Retsinas and E. Belsky, eds., Brookings Press, 2005
Congress has enacted a wide range of laws that affect the provision of credit. This chapter provides an introduction to five types of federal laws that have been enacted to help overcome barriers to credit. These include laws on: disclosure (the Home Mortgage Disclosure Act and Truth in Lending Act); affirmative obligation (the Community Reinvestment Act); negative prohibition (the Equal Credit Opportunity Act); product regulation (the Homeowner's Equity Protection Act); and government subsidies (Federal Housing Administration home mortgage insurance, and the Government Sponsored Enterprises - Fannie Mae, Freddie Mac, and the Federal Home Loan Bank system).
I first set out a short theoretical framework, then I compare these modes of credit market regulation with one another. I also suggest cross-modal strategies to enhance enforcement of the norms underlying these laws. By cross-modal strategies, I mean initiatives undertaken under one regulatory authority to advance norms of another regulation. For example, disclosure can e used to enhance prohibitions regarding racial discrimination. Cross-modal strategies hold out the promise of improving how these different modes of credit market regulation can be mutually reinforcing. Given the scope of the topic, this brief treatment is necessarily tentative and suggestive.
Number of Pages in PDF File: 51
Keywords: Banking, Financial Institutions, Regulation, Law & Economics, Development, Economics
JEL Classification: D10, D60, G21, I38, K20, O16Accepted Paper Series
Date posted: May 13, 2005
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