Penn Law Professor Natasha Sarin researches the impact of key consumer finance reforms implemented in the wake of The Great Recession. “Making Consumer Finance Work,” forthcoming in the Columbia Law Review, details her findings about the successes and failures of reforms aimed at debit and credit cards and overdraft fees, and offers crucial insights to guide policymakers in future regulatory efforts.
Sarin is an Assistant Professor of Law with a secondary appointment in the Finance Department at the Wharton School. Her teaching and research interests are at the intersection of law and finance, with her recent research focusing on financial regulation.
“The Great Recession was the worst economic downturn in the United States since the Depression,” writes Sarin. “More Americans lost their jobs than at any time since World War II. Over two million businesses closed their doors because they could not make payroll. Nearly eight million families lost their homes. The average American household lost one-third of its net worth.”
In response to the crisis, President Barack Obama created the Consumer Finance Protection Bureau and tasked the agency with better regulating the financial markets to protect consumers. Sarin analyzes three of the most significant reforms to emerge from this period: The Durbin Amendment, which capped debit card interchange fees; the Credit Card Accountability Responsibility and Disclosure Act, which reduced banks’ ability to charge hidden credit card fees; and the default rule requiring bank customers to affirmatively opt into overdraft protection.
In her report, Sarin identifies three key lessons from the successes and failures of regulation post-Recession.
Read more at Penn Law News.