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Equality And Access To Credit: A Social Contract Framework, John Linarelli
Equality And Access To Credit: A Social Contract Framework, John Linarelli
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The problems governments face in regulating consumer finance fall into two categories: normative and cognitive. The normative problems have to do with the way that some governments, particularly those adhering to an American model of household finance, have financed social mobility and intergenerational welfare through debt, a tenuous and socially risky policy choice. Credit has a substantial social aspect to it in the United States, where the federal government has in some way engaged in subsidizing about 1/3 of consumer credit, particularly in the residential mortgage market, feeding into a substantial capital markets dimension through government-guaranteed securitization. Most Americans think …
How The Poor Got Cut Out Of Banking, Mehrsa Baradaran
How The Poor Got Cut Out Of Banking, Mehrsa Baradaran
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The United States currently has two banking systems — one for the rich, one for the poor. It wasn’t always this way. Throughout U.S. history, the government has enlisted certain banking institutions to serve the needs of the poor and offer low cost credit to enable low-income Americans to escape poverty. Credit unions, savings and loans and Morris Banks are three prominent examples of government-supported institutions with a specific focus of helping the poor. Unfortunately, these institutions are no longer fulfilling their missions and high-cost, usurious, and sometimes predatory check-cashers and payday lenders have quickly filled the void. These fringe …
The Ilc And The Reconstruction Of U.S. Banking, Mehrsa Baradaran
The Ilc And The Reconstruction Of U.S. Banking, Mehrsa Baradaran
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Since the Great Depression, bank regulators in the United States have endeavored to separate banking institutions from commercial firms, believing such separation was necessary for stability and growth. The recent collapse of our financial system indicates that this premise may be false, as Industrial Loan Companies ("ILCs") – the only institutions where commercial firms are permitted to own banks – remain sound. ILCs have persisted throughout U.S. banking history through exceptions and omissions in banking legislation, but the strength and resilience they have exhibited in the current financial collapse are worth investigating and even emulating. This article examines recent controversy …