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Democracy DeclinedThe Failed Politics of Consumer Financial Protection$
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Mallory E. SoRelle

Print publication date: 2020

Print ISBN-13: 9780226711652

Published to Chicago Scholarship Online: May 2021

DOI: 10.7208/chicago/9780226711829.001.0001

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Race to the Bottom: Administrative Rulemaking in the Political Economy of Credit

Race to the Bottom: Administrative Rulemaking in the Political Economy of Credit

(p.183) 6 Race to the Bottom: Administrative Rulemaking in the Political Economy of Credit
Democracy Declined

Mallory E. SoRelle

University of Chicago Press

Chapter six, Race to the Bottom: Regulatory Feedback Effects and the Politics of Rulemaking, explores how the policy feedback dynamics introduced in previous chapters coalesce within the administrative state to limit the lobbying power of consumer advocacy groups and diminish borrower political participation in regulatory rulemaking. This chapter investigates how two features of consumer credit policy administration—1) whether rulemaking and enforcement authority for a policy is fragmented or centralized and 2) whether the responsible agency has a primary mission of prudential regulation or consumer protection—constrain the behavior of bureaucrats, the capacity of advocacy groups to lobby on behalf of consumer financial protection, and the political participation of citizens. Drawing on interviews with consumer advocates and records of consumer credit complaints, the chapter shows how the historical tendency to fragment regulatory authority for consumer financial protections across several agencies whose mission is to protect banks and not borrowers creates obstacles for both public interest lobbying and borrower engagement. It explores how the creation of the Consumer Financial Protection Bureau might reshape these dynamics by centralizing much of the regulatory authority for consumer financial protection in a single agency designed explicitly to work on behalf of borrowers.

Keywords:   rulemaking, policy feedback, lobbying, political participation, regulation, bureaucracy, Consumer Financial Protection Bureau, public interest group, consumer protection

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