On November 10th and 11th, the Washington and Lee Law Review, sponsored the “Regulation in the Fringe Economy” symposium at the Washington and Lee School of Law. The symposium was co-sponsored by the Frances Lewis Law Center, the Consumer Credit Research Foundation, the Washington and Lee Class of 1963 Scholar-in-Residence Fund, and the National Conference of Bankruptcy Judges Endowment for Education.
The symposium focused on lenders dealing in the fringes of the economy – payday loans, auto title loans, rent-to-own stores, and for-profit college loans. With the economy in shambles, more and more people have turned to these lenders and services rather than traditional, mainstream financial service providers. This trend and how to response was the primary topic of the renowned scholars in attendance.
The first panel, moderated by Bruce Miller, discussed mainstream ideas about fringe lending and regulation. Professor Robert Mayer addressed loan sharking and the effect of interest caps on their prevalence. Professor Lance McMillian used the lens of HBO’s The Wire to discover that regulation is superior to prohibition for inevitable markets. Professor Todd Zywicki discussed the rise of overdraft protection and the data surrounding it.
Professor Ronald Mann of the Columbia Law School gave the keynote address. Prof. Mann set a measured tone for the symposium by discussing the arguments that exist on both sides of the issue. He contrasted the paternalistic approach of regulation and consumer protection with the rational decisions consumers make regarding fringe lenders.
The second panel, moderated by Hilary Miller, addressed whether payday lenders should be regulated and the best way to do so. Jay Speer discussed the predatory lending practices he has witnessed as Director of the Virginia Poverty Law Center and promoted heightened regulation. William Webster, Chairman of Advance America, argued that payday loans are a valuable service for short-term, small-dollar customers and that excessive regulation would leave consumers worse off. Professor Paige Marta Skiba analyzed consumer behavior and concluded that many regulations considered are ineffective in protecting consumers. Professor Christopher Peterson addressed the problems with regulation enforcement to date and proposed a mandatory warning sign for all vendors charging an annual percentage rate above 45%.
The third panel, moderated by W&L’s own Professor Margaret Howard, discussed what future issues may arise in the fringe economy. Professor Jean Braucher raised the issue of for-profit college loans and the ability for students to pay their debts after graduation. Professors Eric Chaffee and Geoffrey Rapp talked about peer-to-peer lending, the practice where debtors borrow from a collection of their peers rather than a bank or institution. Professor Nathalie Martin addressed internet-based payday lending and the use of tribal immunity to skirt consumer protection laws.
The last panel, moderated by Professor Harlan Beckley of W&L, covered empirical data about fringe lending and some of the federal measures enacted. Professor Creola Johnson covered the Military Lending Act’s 36% cap on consumer loans for military members and the power of the newly-created Consumer Financial Protection Board. Professor Rich Hynes analyzed the data behind common criticisms of the payday lending industry. His results overall were inconclusive, acknowledging the complexity of the issue. Professor Alan White used examples in microcredit programs to highlight regulation suggestions for the small-loan credit industry. Professor Jim Hawkins presented data he gathered about the auto title industry and how consumers view them.
The symposium overall was a great success, highlighting many of the discussions regarding the fringe economy. It fostered a tense, but productive discourse between consumer protection advocates, academics, and industry representatives.
Professor A. Benjamin Spencer had his article, The Judicial Power and the Inferior Federal Courts, 46 Ga. L. Rev. 1 (2011), published in the Georgia Law Review.
The article discusses the third branch of the federal government, the Judiciary, which traditionally has been viewed as the least of the three branches in terms of the scope of its power and authority. The Supreme Court has permitted Congress to exercise authority over the Federal Judiciary, including the limitation of jurisdiction of inferior federal courts, without much thought or explanation.
Professor Spencer argues that it may be possible to imagine a more robust vision of the Judicial Power through closer scrutiny of the history and text of Article III of the U.S. Constitution. The Constitution vests Judicial Power of the United States exclusively in “one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” In the article, Prof. Spencer reviews historical evidence that reveals that delegates to the Federal Convention considered and rejected language that would have given Congress express authority to manipulate the jurisdiction of inferior federal courts. The article argues that this fact, coupled with repeated indications by the Framers and by the delegates to state ratifying conventions that the independence of the Judicial Branch from each of the other branches was of paramount importance, may give some weight to an understanding of the Judicial Power that challenges—or at least may moderate—our understanding of Congress’s authority to withhold from the inferior federal courts some portion of the Judicial Power vested in them under Article III.
In the sixth and final installment of the Fall 2011 Faculty Workshop Series, sponsored by the Frances Lewis Law Center, Professor Greg Lastowka of the Rugters School of Law-Camden, came to speak today about his new book, Virtual Justice: The New Laws of Online Worlds and amateur creativity.
Professor Lastowka discussed amateur creativity and its growing place in media production. Once viewed as a minor offshoot of creative works, amateurs now create content that rivals professional content. He pointed to the recent news that CNN let go of 50 photographers because amateur photographers are producing similar content for free. Prof. Lastowka then discussed the liability of user-generated content in virtual worlds. Who is responsible if a user creates infringing content using tools provided by the world’s creator? In response, Prof. Lastowka suggested broad means to change copyright that might allow amateur works to flourish, even derivative ones, while protecting professional work.
Many thanks to Professor Lastowka for visiting W&L and sharing his ideas with the faculty.
Professor Todd C. Peppers, Lecturer in Law, recently published his article, Did You Hear the One About Chief Justice Burger and the Itinerant Litigant?, 15 Green bag 2d 25 (2011), in The Green Bag Journal of Law.
In the article, Prof. Peppers addresses the topic of Supreme Court humor. Rather than cover humor displayed by the justices, he focuses on the clerks. Prof. Peppers uses original documents and records held by the Powell Archives, housed at the Washington and Lee School of Law. He uncovers a wealth of humor and history during Justice Lewis F. Powell, Jr.’s tenure on the Court and shares it in the article.