The Regulation of Consumer Financial Products: An Introductory Essay with Four Case Studies

52 Pages Posted: 27 Jul 2010 Last revised: 16 Dec 2010

See all articles by John Y. Campbell

John Y. Campbell

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Howell E. Jackson

Harvard Law School

Brigitte C. Madrian

Brigham Young University Marriott School of Business; National Bureau of Economic Research (NBER)

Peter Tufano

University of Oxford - Said Business School; National Bureau of Economic Research (NBER); University of Oxford - Said Business School

Date Written: September 1, 2010

Abstract

The recent financial crisis has led many to question how well businesses deliver consumer financial services and how well regulatory institutions address problems in consumer financial markets. In response, the Obama administration proposed a new agency to oversee consumer financial services, and the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act embraced the Administration’s proposal by creating the Bureau of Consumer Financial Protection. Other regulatory reforms have been advanced, and in some cases adopted, in recent years, at both the federal and state level. In this paper, we provide an overview of consumer financial markets, detailing the purposes they serve, the extent to which they suffer from market failures or other deficiencies, and the structure of our current system of regulation. To illustrate our analytical framework, we present case studies on retirement savings, residential mortgages, payday lending, and mutual funds. We conclude with a series of observations on the limits of government intervention, suggestions about how to measure whether government intervention is successful, and potentially fruitful lines of future research and data collection.

Keywords: Consumer Finance, Mortgages, Payday Lending, Retirement Savings, Mutual Funds, Financial Regulation, Bureau of Consumer Financial Protection

JEL Classification: D03, D1, D14, D18, D91, G2, G21, G23, G28, K23, P46

Suggested Citation

Campbell, John Y. and Jackson, Howell Edmunds and Madrian, Brigitte C. and Tufano, Peter, The Regulation of Consumer Financial Products: An Introductory Essay with Four Case Studies (September 1, 2010). HKS Working Paper No. RWP10-40. Available at SSRN: https://ssrn.com/abstract=1649647 or http://dx.doi.org/10.2139/ssrn.1649647

John Y. Campbell

Harvard University - Department of Economics ( email )

Littauer Center
Room 213
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HOME PAGE: http://scholar.harvard.edu/campbell

National Bureau of Economic Research (NBER)

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Howell Edmunds Jackson (Contact Author)

Harvard Law School ( email )

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Brigitte C. Madrian

Brigham Young University Marriott School of Business ( email )

Provo, UT 84602
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Peter Tufano

University of Oxford - Said Business School ( email )

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Oxford, OX1 1HP
Great Britain
+44 (0) 1865 288551 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0) 1865 288551 (Phone)

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