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New Study Shows How Overregulating Short-Term Lenders Harms Consumers

We at CFIF have consistently highlighted the peril of federal, state and local government efforts targeting the short-term consumer lending sector.

Less than two years ago, we specifically sounded the alarm on a New Mexico law artificially restricting interest rates on short-term consumer loans.

Well, a new study entitled "A New Mexico Consumer Survey:  Understanding the Impact of the 2023 Rate Cap on Consumers" that surveyed actual borrowers confirms our earlier warnings:

Key findings include:

•Short-term,small-dollar loans help borrowers manage their financial situations, irrespective of the borrower’s income.

•The rate cap has failed to improve the financial wellbeing of New Mexicans, specifically those who had previously relied on short-term, small-dollar loans.


November 27, 2023 • 03:57 PM

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Biden Administration Inexplicably Resurrects “Net Neutrality” Zombie Print
By Timothy H. Lee
Thursday, September 28 2023
During Net Neutrality’s brief lifespan as the Obama Administration concluded, investment fell approximately 20%, including a $5.6 billion decline in its first full year in effect.

Joe Biden suddenly finds himself in a deep hole, yet his administration inexplicably prefers to keep digging.  

His policy mismanagement has put him behind Donald Trump by ten points in a new ABC News/Washington Post survey, but he doesn’t appear interested in correcting course.  

Instead, the Biden Administration now sets its sights on the thriving internet sector by resurrecting the zombie-like “Net Neutrality.”  

If it succeeds, that would kneecap an internet sector that remains one of the few sectors of the American economy that Biden hasn’t yet driven toward dysfunction.  

For most people, the term Net Neutrality likely rings only a vague bell, but it’s important to understand the grave threat it poses to such a vital sector of our economy and society.  

Stated simply, Net Neutrality as currently envisioned by its proponents would empower federal bureaucrats at the Federal Communications Commission (FCC) to regulate internet service as a “public utility” under laws passed during the Great Depression.  It takes an astonishing degree of chutzpah to label such a heavy-handed federal intervention as “neutrality.”  

In any event, to understand the danger and proven market failure of that idea, a brief historical primer is in order.  

Beginning in the Clinton Administration and for two decades spanning both Democratic and Republican administrations, the federal government maintained a “light touch” regulatory posture toward internet service.  As a consequence, the internet flourished like few innovations in human history.  

The Obama Administration, however, got the bright idea that what the internet needed was the heavy hand of federal government regulation to “fix” something that wasn’t broken.  After suffering several legal defeats, the Obama FCC finally managed to reclassify internet service as a public utility in the manner that the Biden FCC now hopes to revive.  

As an objective matter, the negative consequences were immediate and severe.  

For the first time ever outside of an economic recession, private internet investment actually declined.  During Net Neutrality’s brief lifespan as the Obama Administration concluded, investment fell approximately 20%, including a $5.6 billion decline in its first full year in effect.  

Fortunately, the Trump Administration FCC under Chairman Ajit Pai rescinded the Obama FCC’s failing Net Neutrality regulation, thereby returning internet service to the light touch approach that had prevailed since the 1990s with such success.  In contrast to the investment decline during Net Neutrality’s brief lifespan, investment increased and U.S. internet speeds accelerated nearly 40% in the first year following repeal.  

When the Covid pandemic hit, something even more remarkable occurred.  Namely, just when many expected internet service to crash as employment and schooling migrated online, U.S. broadband speeds actually increased 91% in 2020.  

Further illustrating the failure of the Net Neutrality approach, Europe fared far worse during the pandemic.  The more regulated European networks struggled to meet increased consumer demand, leading governments to ask content providers like Netflix to reduce streaming video quality from high-definition to standard.  

Those quantifiable failures of Net Neutrality prompt the question of why the Biden Administration suddenly seeks to resurrect it.  There’s obviously no internet service failure for it to correct.  The answer, of course, is that it’s another way for the Biden Administration and its far-left activist base to commandeer another sector of the economy and American life under their political control.  

The Biden Administration has degraded every sector that it has touched, and internet service under renewed Net Neutrality would be no different.  

Thankfully, this proposal is nearly certain to be overturned by courts, which have shown increasing skepticism toward this sort of Biden Administration overreach.  

That’s not conservative opinion, it’s the assessment of former Obama Solicitors General Donald Verrilli and Ian Gershengorn:  

The U.S. Supreme Court has made crystal clear, as recently as this June when it struck down President Joe Biden’s student loan forgiveness program, that it will invalidate federal agency regulations on matters of major economic and political significance – what the court refers to as “major questions” – unless Congress has given the agency specific, unambiguous authority to regulate on the subject.  …  In the last two years alone, the court has used the doctrine to strike down the CDC’s eviction moratorium, OSHA’s workplace vaccine mandate, and the EPA’s clean power initiative, as well as the Biden student loan plan.  The message from the court is clear.  

As we explain in a white paper published today, any effort by the commission to subject broadband internet access service to traditional common carriage regulation can’t survive the “major questions” buzzsaw.  

It shouldn’t have to come to that, however.  

This latest proposal to revive already failed Net Neutrality policy should be dead on arrival. 

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Notable Quote   
"The Biden administration has outpaced other recent presidents in issuing significant regulations that place a financial burden on taxpayers, according to a report from the Competitive Enterprise Institute.Under President Joe Biden, the federal government completed 89 economically significant rules in 2022, defined as those with at least a $100 million economic impact, which is higher than any point…[more]
— Will Kessler, Daily Caller News Foundation
Liberty Poll   

What grade would you give the Biden administration thus far regarding all aspects of its approach to the Hamas/Israel conflict?