Consumer Use and Government Regulation of Title Pledge Lending

By Todd Zywicki on March 17, 2011

Dr. Todd Zywicki, Director at Global Economics Group, demonstrates how regulating title loans would result in a net decrease in consumer welfare. In Consumer Use and Government Regulation of Title Pledge Lending, (Loyola Consumer Law Review, Vol. 22, No. 4, 2010), Dr. Zywicki shows that, as a matter of principle, price regulation has three unintended consequences: term re-pricing, product substitution and rationing. He concludes that each of these unintended consequences has a substantial negative impact on the borrowers (such as being forced to pay for bounced checks, overdraft fees, or higher rates on credit cards) that outweigh any benefit that they might see. Consumer Use and Government Regulation of Title Pledge Lending