So I'm on the train, traveling to Boston. Most of the world thinks I am going to the Law and Society Conference to present a paper on comparative enforcement of consumer financial protection law (more about that in a minute), but as you all know, the purpose of all of my business travel these days is to go running with Spencer. We are meeting at 4:15, and with any luck, my tender heel will allow me to shuffle along for a bit.
I haven't really run in three weeks, since an abortive attempt the Saturday before Mother's Day (Hi B__). I've been resting it, stretching it, rubbing topical gel on it, biking and swimming. I have tested it with a few short 1/2 mile runs to the gym, and, while it is still sore, so long as I (1) wear regular non-minimal shoes; (2) land midfoot; (3) keep my stride short and symmetric; and (4) go really slowly, I seem to be fine. I hope that Spencer thinks this sounds like fun. Hopefully this will be two steps forward rather than two steps back.
On to the law part. I'm presenting on Saturday morning (8:15). The paper is a joint project with my frequent co-author Susan Block-Lieb. After describing the different enforcement architectures in the US and EU, the thrust of our presentation is as follows:
1) A common complaint about consumer protection in the financial services area is that it subjects firms to multiple conflicting layers of regulation and multiple conflicting enforcement regimes. This imposes costs, and the pass along increases the cost of credit.
2) This point is fair enough, but it is also a generic, non-substantive, overbroad attack on regulation generally.
3) On the "substance" side, regulations can be broken into a number of categories where lack of harmonization and multiple regimes are more or less costly. To the extent that various regulators at various levels and in various jurisdictions are seeking to articulate fairly basic norms of good behavior, competing formulations should not be particularly problematic. One should not engage in "negligent promising," or make statements in "bad faith," for example, regardless of how the obligation is formulated verbally. By contrast, rules about firm structure or transaction structure can impose significant costs, or limit the geographic scope of a firms operation. In between, there are various forms of safe harbors, mandatory notices, and so on, where complying in one jurisdiction may lead to non-compliance in another. Depending on the type of regulation, the argument for centralization of regulatory authority and/or harmonization has more or less force.
4) on the "enforcement" side, there are costs to centralization of enforcement. First, it reduces the number of people available to do the work. Second, it increases the likelihood and effectiveness of capture. For these reasons, decentralized and concurrent enforcement regimes seem preferable. The problem is that some form of coordination is necessary to ensure that the cumulative effect does not lead to overdeterence. This can be accomplished either through a res judicata approach or a coordination approach.
5) A res judicata approach is problematic, as it creates a incentive to forum shop for and settle with the most permissive regulator, or to litigate before the authority with the least intrusive remedies.
6) Better is a soft-law mechanism for coordinating enforcement and deciding who will take the lead. I understand that this is the approach followed in the EU (Philip et al correct me if I'm wrong). Some of this coordination is built into the allocation of enforcement power in the US (CFP v. prudential regulators). I need to learn more about how/if this would work for consumer financial protection in the EU.