On Feb. 10, the Sanford School of Public Policy celebrated the official launch of Duke Assistant Professor Mallory SoRelle’s book “Democracy Declined: The Failed Politics of Consumer Financial Protection.” Dr. SoRelle is a public policy researcher whose work centers on consumer finance protection and her field’s impact on socioeconomic inequality. Joining her in this discussion was fellow author and University of Minnesota professor Joe Soss, who loves to explore how various forms of governance give way to the exploitation of marginalized groups.
During the 2007-2008 financial crisis, SoRelle’s first job as a research assistant with the National Consumer Law Center inspired the salient questions featured in her book. She noticed how reluctant policymakers were to welcome changes in consumer finance despite the constant pressure by experts and threats of market collapse. Americans constantly face inequality and opportunity loss, corollaries of living in a society buried in debt — so why haven’t policymakers done better at protecting our finances?
“This doesn’t happen by accident,” SoRelle shared in her Zoom book launch. “When you have an economy that is dependent on mass consumption, you need people to have purchasing power.”
Government policymakers skip on wage increases and social service expansions in favor of policies that make private credit more accessible. They try to protect consumers from predatory loans while still maximizing the amount that borrowers are willing to lend. In the end, policymakers prioritize information disclosures as the primary mechanism for protecting consumers.
The nature of financial disclosures is far from the grocery labels we are used to seeing. SoRelle notes the lack of visible government regulation markers, which forces consumers to seek redress from market actors directly and bypass political interventions. Although the government dictates these disclosures, the government’s role fades into the background when the responsibility of knowing better befalls the consumer. “This creates a self-perpetuating cycle,” Relle said. “Where policymakers adopt a specific type of remedy, that remedy de-politicizes most borrowers, and it makes it hard for interest groups to change either of these processes.”
In her Q&A session with Soss, SoRelle picks up on why constituents hold little sway over policy makers while keeping a positive outlook for the American economy: “This is not a story of incompetence. This is a story of structural barriers making it hard for competent and well-intentioned people to achieve the goals they want.”
SoRelle outlines the paths towards a just system of credit. We can provide reasonable alternatives to the existing loan systems and make the government more visible by shifting focus to what people already believe the government is already responsible for. “Consumers are more likely to respond to calls of political action when you compare consumer financial protection to other issues of economic security.”
“At the end of the day, this is not a case of something that doesn’t happen. Whether it’s policymakers or ordinary consumers pursuing a set of choices instead of another, people do take action to address problems,” SoRelle reminds us. “They may not just be political.” Blurring the line between consumer credit and financial regulation, “Democracy Declined” attempts to expand the number of viable options a person can take in protecting their finances — bringing the government back to its regulatory role is but one of them.
