Chapter 7: The Crash that Launched a Thousand Fixes: Regulation of Consumer Credit after the Lending Revolution and the Credit Crunch
Iain Ramsay and Toni Williams1 INTRODUCTION The consumer lending ‘revolution’2 – with its promise of the democratisation of credit – was followed by the credit crunch. The credit crunch has stimulated both immediate regulatory initiatives and more fundamental reflection on consumer credit regulation.3 As the Turner Review in the UK 1 An earlier draft of this chapter was presented at the University of Tokyo, 9 March 2009. We thank those who made comments, in particular Professor Hi-san Hirose. 2 See Federal Deposit Insurance Corporation, Evaluating the Consumer Lending Revolution (2003), available at http://www.fdic.gov/bank/analytical/ fyi/2003/091703fyi.html and R. Brown and S. Burhouse, ‘Implications of the Supply-Side Revolution in Consumer Lending’, 24 St. Louis University Public Law Review, 363 (2005). This revolution included: financial liberalisation, deregulation of interest rates, securitisation, the application of sophisticated computer technology to develop predictive credit scores and risk-based pricing, and the increasing spread of all-purpose credit cards. 3 In the UK these include: ‘A New Approach to Consumer Credit’ in A Better Deal for Consumers: Delivering Real Help Now and Change for the Future, Cm 7669 (London: TSO, 2009); ‘Supporting and Protecting Consumers’ in HM Treasury , Reforming Financial Markets, Cm 7667 (London: TSO, 2009); HM Treasury, A New Approach to Financial Regulation: Judgment, Focus and Stability, Cm 7874 (London: TSO, 2010), ch 4; Financial Services Authority, Consultation Paper 10/16, Mortgage Market Review: Responsible Lending (London: FSA, 2010); and HM Treasury/Department of Business Innovation and Skills, Call for Evidence in Support of the Consumer Credit and Personal Insolvency Review (2010)...
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