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Many criticisms of payday lending are based on myths. The evidence shows payday lending offers benefits to consumersNovember 5, 2013
Instead of restricting or eliminating payday lending markets through regulation, policymakers should seek to open them up to competition by repealing payday lending bans and regulations. The goal should be to maximize consumer choice and minimize the cost of short-term loan transactions. This will benefit economic growth generally and short-term borrowers in particular.
Sallie Mae and Uncle Sam: Cronyism in Higher Education FinanceJuly 10, 2013
In the last decade total student loan debt has grown nearly fourfold. Much of the focus on this growing problem has concentrated on the increasing cost of higher education. This brief looks at another side of the student loan bubble: the crony capitalism of SLM Corporation – more commonly known as Sallie Mae – and the way in which it has come to dominate student loan markets.
How the Private Sector Can Return to Mortgage FinanceMay 3, 2012
The mortgage finance market has leaned heavily on government support over the past few years. More than 90 percent of mortgages originated in 2011 were securitized by government entities using taxpayer funds to guarantee investors against default risk. This support cannot continue forever. The status quo perpetuates many of the policies that contributed to the housing bubble and consequently promotes an unstable mortgage market. In order to avoid another crisis, and to reduce the $5.8 trillion in liabilities for taxpayers, the government must exit mortgage finance and private capital must shoulder mortgage default risk. There are several roadblocks facing this transition, including subsidies for government-sponsored enterprises, Dodd-Frank regulations, legal complexities for mortgage-backed securities, and a profound lack of confidence in the models used by credit rating agencies to assess mortgage investments. This policy study examines the nature of these roadblocks and proposed solutions to ease the path of the private sector taking back housing credit risk from taxpayers.
It is time for another edition of the Durbin Swipe Fee Watch. This time we look at a $1 billion subsidy for gas retailers that the Durbin Amendment has created. Consumers are still getting the shaft with this regulation.
The idea former FDIC Chairwoman Sheila Bair proposes in her Washington Post op-ed is completely crazy, but that is the point. She is just articulating what Fed policy is for the financial system, suggesting it for the population as a whole, and showing it to be crazy on both fronts. Here is a guide to understanding the Bair tongue-anchored-to-cheek op-ed.
Fed Chairman Bernanke told the National Association for Business Economics conference this week that the labor market was still in “deep” trouble and so we should expect ZIRP (zero interest rate policy) to continue for the next several years. Putting the politics aside, what Bernanke is essentially saying is that he prefers the trade off of propping up stock prices versus encouraging savings.
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