DiLorenzo Paper on Mortgage Market Reforms

Professor Vincent DiLorenzo has written Barriers to Market Discipline: A Comparative Study of Regulatory Reforms,” 29 Arizona
Journal of International and Comparative Law 517-556.  Here’s the abstract:

 

This article explores mortgage market reforms in the U.S. and U.K. in response to the recent mortgage market crisis. First, the article explores the extent to which regulatory bodies have recognized behavioral barriers to market discipline on the part of both consumers and industry actors. Second the article examines the varied response in the U.S. and U.K. to both market limitations and behavioral limitations to industry self-discipline that led to unsafe lending practices in the period 2003 through 2007. The greater emphasis on rules-based regulation in the U.S. after 2008 is compared with the continued reliance primarily on principles-based regulation in the U.K. This difference, however, is not what will determine industry commitment to legal compliance. Rather, the main finding is that future compliance with safety and soundness requirements will depend on a regulatory policy and enforcement record that will alter the industry’s past conclusion that evasion, or even noncompliance, with legal requirements is a reasonable business decision based on cost-benefit evaluations.

 

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