Rules We Can Really Live By

By Karen Petrou

  • Judging U.S. rulemaking by its benefits to the public good, not just by its impact on private wealth, is transformational and, with a new CBA methodology, also more than possible.
  • Equitable rules can be both effective and efficient.
  • Maximizing the public good is not synonymous with redistribution or reverse discrimination.

In 1993, President Bill Clinton issued Executive Order (EO) 12866, creating hurdles ahead of federal rules that are “economically significant.”  This was measured by a cost of $100 million or more.  On January 20, President Biden began a long-overdue rewrite, stipulating that federal rules are henceforth to be judged not just by their impact on private wealth, but also by what becomes of the public good.

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Dialing for Dollars: Solving CBDC’s Equality Conundrum

By Karen Petrou

  • CBDC advocates tout its inclusiveness, but the digital divide is a profoundly exclusionary impediment to CBDC access for LMI, disabled, older, and rural households. 
  • Centralized deposit-taking and payments via the Post Office and/or Fed pose challenges to personal privacy and even freedom of expression that, if not averted in initial design, could come to pose significant political and governance risk.  Lack of private competition also presents discrimination risk based on pricing or other terms not subject to outside scrutiny.
  • If CBDC succeeds as some envision it, then lending will come either from the federal government – Big Brother problems of still more concern – or capital-markets sources outside the perimeter of safety-and-soundness and often also consumer-protection regulation and enforcement.
  • A CBDC in which the Fed acts as an open-source utility corrects for many current inclusion, governance, and intermediation obstacles to payment-system speed and efficiency. 
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Paternalism, Payday Lending, and the Post Office

By Karen Shaw Petrou

It is a truth known to all who seek consumer protection from predatory lending that payday lending is a scourge.  However, it is also a truth among business analysts that financial institutions will not willingly go broke. Regulated companies will exit a business which cannot generate profit regardless of unmet demand.  It is also a truth among business analysts that unregulated companies then rise to meet this demand, often undeterred by the social-welfare scruples that underpin the consumer-protection rules.
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