We speak with Vijay Raghavan, Professor of Law at the Brooklyn Law School, about his recent article, “The Radical Potential of Consumer Financial Protection,” published in Boston College Law Review in April 2025. Raghavan builds on the work of constitutional money theorists, as well as his legal experience in the public sector. In particular, he argues that consumer financial protection is an essential and potentially radical response to the “finance franchise,” a predominantly anti-democratic process by which modern governments delegate the money creation process to private actors like banks. The consensus in contemporary left sociological and legal scholarship dismisses consumer financial protection as a rearguard effort to sustain neoliberal capitalism. Raghavan, by contrast, reconceptualizes consumer financial protection as a vital counterweight to legally structured domination in financial markets. By tracing the history of this struggle from the early 20th century to the present, Raghavan provides a powerful legal framework for today’s debtor movements, including the national campaigns to cancel student and medical debt. In doing so, Raghavan offers a forward-looking vision for how to build a durable consumer financial protection regime capable of reclaiming democratic authority in the post-Trump era.
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Transcript
This transcript has been edited for readability.
William Saas
Vijay Raghavan, welcome to Money on the Left.
Vijay Raghavan
Thanks for having me.
William Saas
Just to get us started, could you tell us a little bit about your professional and personal background and how it ties in with your fabulous work that we’re going to be talking about on the consumer financial protection regime?
Vijay Raghavan
Yeah, sure. I’m happy to go as in-depth as you want me to, but I’m a lawyer by training. Although my license is no longer active, I graduated from law school in 2007.
My early career was pretty conventional. I went to a big law firm to make money. I think I went to law school with some aspirations to do good, like, in a broad sense, but I ended up at a big law firm doing tax work. It was just as terrible as people say that kind of work is. I worked for really mean people for really long hours. I made what at the time seemed like a lot of money, but I didn’t really understand the work that I was doing. That might feel a little uncharitable. It’s funny, after I became an academic, I ended up contacting one of the former partners I used to work for who’s now in New York in a different firm, and he sort of copped to being a jerk when he was my boss and apologized for it.
I was like, it’s been a decade. If I wanted to place my students there, I thought it was a good professional connection to rebuild or rehabilitate. It wasn’t hard to rehabilitate. He was like, “I’m so sorry. I probably chased you away.” Which, it’s all true.
I was a tax associate at a big law firm. I guess the work was kind of intellectually stimulating, but I really didn’t understand what I was doing. I was definitely working on the tax aspects of transactions that were kind of adjacent to things that caused the world to collapse.
In 2008, when Obama got elected, I — like other people — was really hopeful. I mean, his presidency was pretty disappointing, at least for the kind of work that I do, but at the time I was pretty hopeful. I wanted to be broadly involved in doing something good. The financial crisis was in full effect at that point.
I think it started as early as April of 2006, but the world found out about it in September of 2008. I think those two things kind of pushed me to leave the firm, plus I didn’t like the work that I was doing. As someone who was a tax associated big law firm, trying to make the switch to something public oriented was a little bit hard.
It’s hard to convince people that you have the skills or the desire to do anything. There were lots of people who were similarly situated who were not happy with the work that they were doing, saw something happening, wanted to do more, but didn’t really have a good case to make. I ended up getting this two-year fellowship at a legal aid organization in northern and central Illinois. It was called Prairie State Legal Services. It serves suburban, exurban and rural Illinois outside of Chicago. I was doing tax base legal aid work, mostly representing people who had tax debts to the IRS and then some people who were losing their home to property tax foreclosures.
A lot of that work was kind of downstream of the financial crisis. People incurred tax debt as a result of other problems that they were facing that were more directly tied to the financial crisis. So, for example, maybe they lost their home, or they defaulted on debt and that debt was canceled. That canceled debt is treated as income under our tax code, which my last article was about that, and that creates tax consequences or one of the obligations they fell behind is on their tax obligations. I was representing these people from the IRS.
The IRS is a really powerful creditor and has lots of remedies they can pursue that normal creditors can’t. I did that work for about two years. It was an interesting time to be doing that work. I saw things I didn’t understand at the time, but I definitely saw where things were headed or early signs of where things were headed. I would encounter lots of low-income white homeowners in rural America who had taken out predatory loans and lost their homes to foreclosures. The failure of our federal government to address their material concerns was pushing them to embrace a kind of reactionary politics. I definitely met people who were really angry that we were bailing out the banks and not going after companies like Ditech and Countrywide, these companies that had gone after them. People like Glenn Beck and the Tea Party really spoke to them.
After doing that work for about two years, I think I wanted to be more involved with work that was at the center of post financial crisis reform. I ended up going to the Consumer Fraud Bureau of the Illinois Attorney General’s office to do consumer protection work. At the time, I didn’t really know what that was, to be perfectly honest, but it seemed closer to where I wanted to be. At the time, I joined the Illinois Attorney General’s office, there was a bunch of post financial crisis litigation that was about to get started or that was well underway that I got involved in. I also joined at a really weird time. I don’t know the extent to which you all have discussed the foreclosure crisis in the robo signing scandal on this show, but I was joining that office at the time when the terrible robo signing settlement was being negotiated, and that was a disillusioning way to start that kind of work. Then after that I ended up being involved in litigation against the rating agencies that our office was involved in. I ended up investigating all kinds of shady loans, payday lenders, title lenders, installment lenders, subprime auto lenders, contract sellers, which was this practice from the redlining era that had resurfaced after the financial crisis in the same segregated neighborhoods in big cities as the practice was originally peddled in the 1950s. So, yeah, it was fun, really rich and rewarding work. I did that for about eight years, and then for nine months I kind of ran a division, Illinois’s banking regulator, where I supervised the supervision and regulation of fringe financial lending in Illinois and credit unions and title insurers. Then I joined academia.
William Saas
So, you got chased out of the big bad law firm before the financial crisis fully hit. But when the financial crisis fully hit, you were already doing that kind of consumer protection or consumer advocacy sort of work. That’s amazing timing.
Vijay Raghavan
I left in February. I started in February 2009. I was interviewing right around the time of the Lehman bankruptcy and the AIG (American International Group) bailout.
William Saas
Did you feel like you’d seen the writing on the wall or was it just “this is not the work for me.”
Vijay Raghavan
I mean, no, I really didn’t understand what was happening. I recall one of the last things that I did at the law firm was being asked to look at the tax aspects of a collateralized debt obligation (CDO). I remember doing research. I was like, “what is this?” I was trying to wrap my head around it. Then I was out the door. I really didn’t know what I was doing. Although I’d say it was adjacent, I don’t know how close it was to what caused the world to implode.
William Saas
You know you’re in trouble when a tax lawyer can’t decipher the CDO. You say you got into academia. What was the last push into academia from the consumer protection work that you were doing?
Vijay Raghavan
You know, I’d been doing it for about a decade, and although I enjoyed the work, I was a bit disillusioned by not being able to push the bureaucratic levers of state government as fast as I wanted. There were some cases that I really wanted to launch that I wasn’t able to launch, or I wasn’t able to launch in the way that I wanted to launch them. When you’re working for the state government or for the federal government as an enforcement attorney — not as a defendant where you’re defending the state, instead you’re suing businesses — you’re often not on a tight timeline. You have time to develop cases and to develop ambitious legal theories. Sometimes you end up putting years into that work. The process of building that case is definitely very satisfying and you learn a lot. I spent years from 2014 to 2018 developing the case against a massive national subprime auto lender where we were doing lots of novel things like reverse engineering their credit scoring models to figure out how likely they thought people were going to default and tying that then to figuring out how to wedge that into legal frameworks. We got to take sworn statements from the heads of their decision science team but getting that case off the ground ended up being very difficult.
Things like that pushed me to try to find something else to do. I’d always been interested in academia, and after doing this work for about a decade, I think I wanted some time to think about the work that I was doing. I wanted to try to understand what I was doing and what its value was, and I wanted to try to figure out why the reform efforts of the 2010s had largely failed to constrain debt markets. I was unique. With law schools there might have been a time, maybe 50 or 60 years ago, it was common for practitioners to become law professors. Today, the gap between legal academia and normal academia has more or less disappeared. The vast majority of people who get the job that I got are coming from PhD programs or fellowships. In fact, the year that I was hired, there’s this person who publishes statistics on entry level hiring every year. They do these Venn diagrams of where people come from and it is people from PhD programs, fellowships, and judicial clerkships. The Venn diagram for the year that I was hired, I was an outlier. There was one person outside of the Venn diagram and that was me. What happened was, I had been interested in academia, and we had retained Adam Levitin as an expert on the cases that we were doing. He’s a law professor from Georgetown who I read a lot. Adam sort of encouraged me to pursue this. He thought this was something that I could do. Yeah, that’s how I ended up here.
Scott Ferguson
Obviously, you have multiple influences in your work, but I’m wondering how you came to the legal paradigm around money that we tend to associate with scholars like Christine Desan, or adjacent to the law and political economy movement because for somebody who doesn’t necessarily know what they’re doing, it seems like you just get wrapped up in in dominant thoroughfares, in the same law and economics paradigm, which is intensely neoliberal and prioritizes the private market over governance and legal design. I’m always interested in people’s personal history, but also, beyond the personal aspect, thinking about institution building and the sociology of knowledge. How does someone like you making this move get rooted in this more critical and capacious paradigm? How did that happen for you?
Vijay Raghavan
Yeah, it’s a great question. I don’t totally know how it happened. Yeah. I don’t remember the exact steps, but I will say, when I became an academic, I was really interested in writing about the stuff that I did and trying to theorize it and then trying to figure out where I think I went wrong. I think for practitioners who become academics, they often are intervening in older conversations because they just are not up to date on what people are talking about. They’re like, “the conversations that people are having probably are the same conversations that people are having when I was in law school.” Those were all my touch points. In my first paper, I had an idea of why I think when things went wrong. My idea was, one of the reasons things went wrong was because consumer advocates, or people in my world, have a moral objection to indebtedness and to high-cost loans, but we don’t voice that objection in moral terms. Instead, we try to argue within conventional law and economics paradigm. We’re like, regulating consumer credit is justified because payday loans are inefficient as a result of various market failures like information asymmetries or cognitive bias or externalities. What I was doing in that paper was trying to argue that was really misguided, and it was misguided because background legal entitlements are sort of shaped like the coercive power that people have in market exchange.
Scott Ferguson
That’s a huge leap, right?
Vijay Raghavan
It’s a huge leap. Right. In trying to figure out why I thought it was wrong, I ended up reading Hale. I don’t know how I got to Hale. I got to Hale and Barbara Fried. I was making this argument drawing on Robert Hale. Anyways, background legal entitlements shape the course of power people have in exchanges.
If people don’t have a lot of coercive power as a result of a small safety net, then their capacity to negotiate good terms is going to be really diminished. In that context, it might be perfectly rational to take out a loan that has a 1,500% APR. It’s very hard to justify these interventions in private exchange on inefficiency grounds. That was me trying to like, scratch at there being something wrong with what we’re trying to do here, and it doesn’t even track with our own intuitions. That’s not what we think we’re doing. In doing that work, Luke Herrine was writing at the time. Before my academic career, I was reading a lot of people like Adam Levitin, and once I became an academic, I started reading a lot more of the LPE (The Law and Political Economy Project) crowd. Luke was a big inspiration, for sure. Definitely the last half decade, he’s probably been one of the most important consumer protection scholars. I don’t know how it happened. I started reading the LPE blog. We had a bunch of LPE folks on our faculty. Frank Pasquale was here at the time. Sabeel Rahman, who’s also at Cornell now, was here at the time or he wasn’t here, he was working either at Demos or with the Biden administration. Then we have Jocelyn Simonson, who’s an abolitionist and criminal law scholar, was here as well and very involved in LPE. I started reading LPE and that led me to Hale and Barbara Fried and then eventually that led me to Desan and Katharina Pistor. I think you had names like, and I might get pronounce his name wrong, Jamee…
Scott Ferguson
Moudud?
Vijay Raghavan
Yes. He was on the show, and I was listening to that episode the other day, and I think I have the same sort of intellectual trajectory just without the training in Marxist economics. I found all of the same people. Early on as I was trying to think through what went wrong, I discovered that there was this rich sociological literature and legal literature on why the reforms had failed, why the reforms in consumer financial protection had failed. Much of what I devoted my academic career or my academic writing since then, too, was trying to respond to some of the claims in that scholarship, drawing from people like Desan and Saule Omarova and Raul Carillo and folks like that.
William Saas
Often when we talk to folks about anything on this podcast, there’s a kind of a conversion story and it sounds like that didn’t necessarily happen. Did it sort of make intuitive sense? Was it surprising to encounter some of the arguments? I mean, you note in the article that we’re talking about, that Desan squarely turns the conventional story on its head, building on the work of others, of course. But did it seem, especially from your background, novel strange or intuitive?
Vijay Raghavan
When I read Hale for the first time, after being a lawyer for 13 years, Hale made sense to me. I was like, this is all correct, right? None of this is private exchange, the market exchange is downstream of law. It’s downstream of a lot of things, but law is my lens. Okay, market exchange is downstream of law. But then it was like, I need a thicker account of how law is shaping the kinds of transactions that I’m interested in. There’s some debate about whether there’s an LPE methodology and there’s lots of stuff that fits within the LPE umbrella, like legal realism. It’s big and broad, and it’ll take some time to figure out what it really was, and we need some distance from it.
But, the parts of LPE scholarship that has definitely shaped my thinking and that I gravitate towards is the stuff that is neo-Halean. Taking that basic insight, that background legal entitlements shape exchange, and then trying to figure out what those background legal entitlements are to try to figure out how law shapes exchange in different areas of law. Once I came to Desan and then Omarova and Hockett and then Lev Menand and Morgan Ricks, they’re painting a really rich and thick picture about how the legal design of money shapes exchange and matters for the distribution of wealth. One of the core insights of that literature is that the legal design of money is upstream of exchange and that in our current system, in the American system and in most countries, we allocate this public responsibility of making money to private institutions. We rely on them to expand the money supply in this kind of franchise relationship. One of the ways they expand the money supply is through the extension of credit. This is also in David Graeber.
I think I had read Graeber actually a decade before, but I didn’t really understand it. Once you’ve gone deep into the neochartalist stuff, Graeber makes a lot more sense. They were like, we’re expanding the money supply through extensions of credit. Once you’ve gotten there, it’s really not hard to go from there to thinking about recasting all of consumer financial protection. If private extensions of credit are not truly private, it’s just publicly accommodated private liability and that we are delegating this public function to private institutions to encourage them to expand the money supply. We are giving them all these benefits, like the capacity to charge people money and to ensure that they aren’t reckless, we regulate them. Then the interest rate that people pay on loans is not a risk adjusted rate of return, right? It’s just a tax. It’s just a tax for this public function and consumer financial protection is just one part of our larger legal and institutional framework. The best way to justify and rationalize it is as a check on anti-democratic and regressive nature of delegating this public function to private institutions. I was chasing it. I was like, I need to figure out a way to reconceptualize this. The money folks had done all that work. There was less work drawing connections between that scholarship and the work that I was doing.
Scott Ferguson
Now’s a great time, I think, to pivot to the focus of our conversation, which is your new article, “The Radical Potential of Consumer Financial Protection,” which came out in the Boston College Law Review sometime this year, 2025. I’d like us to work through the large moves that you make in this piece, beginning with your opening gambit, in which you reckon with a certain critical response to consumer financial protection movements, especially in the wake of the global financial crisis, which tend to characterize consumer financial protection as simply symptomatic of a neoliberal worldview and instead of really helping people and creating structural change. It’s just putting a Band-Aid on a wound that is only festering more. I’d like you to set this up. Tell us about how you came to this particular argument and who you’re arguing with and what your nuanced approach is bringing to the table.
Vijay Raghavan
Sure. I should just back up. When I say consumer financial protection, I’m kind of generally referring to the set of federal and state laws that set restrictions on consumer lending and the institutions that are charged with enforcing that. Some of them are public institutions like the Federal Trade Commission and the Consumer Financial Protection Bureau to the extent it still exists and then there’s state entities and then there’s private actors and then there’s debtor movements that are all part of that ecosystem.
So, yeah. Who am I responding to? After the financial crisis, a lot of sociologists were writing about our credit infrastructure and the set of choices that we’d made in the 20th century that had led to the crisis in 2008. Greta Krippner calls that work the macro sociology of credit. There’s a lot of people who are writing in that space with people like Monica Prasad and Louis Hyman and Greta Krippner and Sarah Quinn. The basic argument that they were making is that we built all this public infrastructure during the New Deal to support the expansion of credit markets. Embedded within a lot of that public infrastructure was this progressive cross-subsidy where rich people were subsidizing through taxes affordable credit to lower income people. That affordable credit was then used to expand homeownership and consumption, and we know from that history that that expansion wasn’t perfect. It was progressive, but it was also racist. It was a progressive cross-subsidy, a flawed but a progressive cross-subsidy. And then what happened?
What happens is this creates a bunch of path dependencies. As the state started to pull back and as we started to deregulate, it became easy to mute the effects and the material effects of that deregulation by expanding access to private credit and to encourage consumption. That’s the basic contours of the sociological argument. What happens is, some sociologists, but mainly legal scholars, start to look at the role of consumer protection and consumer advocacy in the story of creating all this public infrastructure to encourage consumption to homeownership via credit and then deregulating credit markets, shrinking the social safety net in a way that turns that progressive cross-subsidy into a regressive one. What role did consumer protection play in that process?
The story that comes out of some of that scholarship is that consumer protection really functioned to legitimize these moves and to support the expansion of credit markets and contributed to the problems of indebtedness that people are facing today. The biggest name in the legal world, and definitely the most influential is Abbye Atkinson at Berkeley. Abbye Atkinson, across three really influential articles, makes a bunch of sharp and mostly correct observations about why credit is bad. The first paper was called “Rethinking Credit as a Social Provision.” In it, she’s like, credit as a kind of social provision is flawed because it’s it only works if you become richer in the time between when you take out the money and then you have to repay it and if you don’t become richer than you’re saddled with debt, and that debt can reinforce subordinating and dominating relationships. Credit can function as a means to commodify people’s marginalized status.
Then another person who was writing here was, and I definitely should mention this, the late legal historian Anne Fleming, who sadly passed away in 2020. She was this really incredible historic legal scholar and historian of small dollar credit. I don’t think there’s another legal historian of small dollar credit and she really did a lot of groundbreaking work on things like the Truth and Lending Act and Unconscionability and has written this really incredible book about the history of small dollar lending regulation in New York City in the 20th century, called City of Debtors. The last article she published before she passed away was kind of making sort of similar moves. Credit is flawed as a form of social provision and that consumer advocates bear some responsibility for the situation that we found ourselves in.
As a descriptive matter, I generally agreed with, and maybe even as a normative matter, a lot of the claims in that scholarship. I just didn’t think they had the story about consumer protection right. One, I think it wasn’t obvious to me that consumer protection always functions in a manner to underwrite a neoliberal expansion of credit markets to encase an existing distribution of wealth. Much of this work is responding to those scholars. I was trying to think of a way to reconceptualize consumer protection, what consumer financial protection is, to respond to some of those claims and to try to find ways to rearticulate what it’s doing and what the best case for it is.
There are two places where I think that scholarship goes wrong. One, I don’t think they have a really thick account of what credit is. The money literature has a much thicker account of what credit is and what’s interesting is the money scholars were sort of writing around the same time. These two lines of scholarship were really not in conversation with one another. There was some overlap, but not much. One was arguing against credit regulation and the other was arguing for a richer articulation of the legal and institutional framework around money and banking, which would involve lots more regulation of the money supply, including publicizing aspects of that framework. One of the big moves of the paper was kind of trying to find a way to respond to that scholarship.
The main way that I respond to that scholarship is I kind of drive from the money literature. I recast consumer financial protection as a downstream response to the anti-democratic and regressive costs of delegation. Once you recast it as a response to the choices that we’ve made in designing our monetary framework, then you can kind of think about the ways in which it’s been a productive countervailing force and what ways it’s been an unproductive countervailing force. Much of what the paper does is it sort of takes that reconceptualization and then applies it to look at different legal and institutional forms consumer financial protection took across the 20th and early 21st century and the problems that consumer financial protection was responding to in each of those eras. Also to try to surface ways in which consumer financial protection has worked as this productive countervailing force to the cost of delegation and the ways in which it’s worked as a more of an accommodation of this enterprise.
Scott Ferguson
I want to get into that history, and how you work through, if I recall, four different key moments and movements. But before we do so, I’d like to invite you to flesh out a little bit more what you mean by delegation. You brought it up in our introductory remarks, but I’d like to give you a chance to really explain it. Then, where does consumer financial protection fit into that realm and problem of delegation.
Vijay Raghavan
One of the key themes from Desan’s work is that the state creates demand for money through taxes. Early money was fully public, and it was issued directly by the state. I don’t know if I have my history fully right, but sometime around the 16th century, states started delegating this public function to private institutions, or to public-private institutions. In America, the arrangement we’ve settled on is a kind of public-private hybrid where we have a bank of banks, a federal reserve, and that bank then delegates expansion of the money supply, not exclusively, but primarily to financial institutions that are either regulated directly by the federal government as national banks or regulated indirectly by the federal government as state banks. Financial institutions expand the money supply in lots of different ways, but one of the primary ways they expand the money supply is through extending credit. That’s delegation. We’re delegating this public function to private institutions. In exchange for the privilege of delegation, these private financial institutions are really well compensated but they’re subject to oversight to prevent that enterprise from collapsing.
Lev Manand writes a lot about the political economy of delegation. One of the things you get from his work is, we settled on delegation because there was lots of concern about a fully public system — you see some of this now with the concern about central bank digital currency — and granting one national public entity the exclusive authority to expand and contract the money supply. Maybe for other reasons we thought these private banks could do a better job of allocating money and expanding the money supply. I’m not arguing that this is descriptively accurate, but I think it reflects the original rationalizations that we thought about. They could do a better job of efficiently, in neoclassical terms, expanding the money supply. That’s why we settled on delegation. Much of the way to understand a lot of our institutional arrangements around money and banking is to constrain that anti-dumping choice to grant private institutions this privilege to expand the money supply and to curb the potential regressive nature of delegation where those expansions may privilege people who have resources already and not privilege people who don’t have resources because it’s more profitable to lend to wealthy people than it is to lend to poor people. One way to understand a lot of the public infrastructure we built is in response to some of the inherent tensions in the choice to delegate this public responsibility to private entities.
Scott Ferguson
Meanwhile, we’ve got a Constitution and both hard laws and soft ideologies — or hard ideologies — that restrict us from using or imagining sub federal governance structures as credit allocators. Even though they do all the time, we don’t even frame them as credit allocators. We just understand them as sort of recycling private money that already exists out there. To me, that’s a huge part of the delegation problem. If you’re delegating to private actors, but you still have strong public entities that can allocate credit at the local level, that might not be quite as asphyxiating as our current system.
Vijay Raghavan
Ultimately, in terms of where I’m at, I personally would prefer a system that’s much closer to something like a National Investment Authority or a public ledger or things like Saule Omarova has written about. A fully public system which could have sub federal entities and federal entities, a set of like state-based entities that are expanding the money supply and that are very democratically accountable and doing it in a way that it doesn’t track some fictitious market allocation, but tracks how we want money to be allocated and for what purposes we want it to be allocated for. This is a kind of a tangent, but it is kind of interesting now how one of the things that I think you see in these debates about stablecoins and crypto is maybe a public reckoning, or recognition that we do have this public-private hybrid and that banks are too connected to elite stakeholders. We need to delegate the delegation to these real private actors that are totally disconnected from the state. To the extent it happens, it will just compound the basic problems of delegation, not improve upon them in any way. So, yeah, that is my best account of delegation.
Scott Ferguson
In a sense, consumer financial protection is a reaction formation to delegation and its problems, but it’s not merely a sign of sickness or something. It’s potentially a countervailing force. Sometimes it aids and abets, and it’s a long complicated history and you’re making the case that history here is rich and multiform and that we need to sift through it, so to speak, in order to have a better theoretical account for the future of what consumer financial protection has been and could be. Is that fair to say?
Vijay Raghavan
Yeah, that’s definitely fair to say. A lot of the work that’s really critical of consumer financial protection was being written as we were rehabilitating this regulatory framework for consumer financial protection, which we did from about 2010 till November of 2024 and now we’re unwriting it. One of the things that I was trying to do in the piece is I was trying to work through the development of consumer financial protection as a response that took on these various legal and institutional forms. Try to work through that history to try to understand what we were really doing when we were reconstructing this regulatory framework. Was it just simply just a recapitulation to the failed reforms of the past or were we trying to resurrect something better and more hopeful?
As you work through the development of consumer financial protection over the course of the 20th century and reconceptualize it as a response to the problems with delegation, you see that it has taken on these different legal and institutional forms at different times. Sometimes those forms have been productive, sometimes they haven’t. In the early 20th century, consumer financial protection emerges in response to the problem of low-income laborers who are taking out these really high-cost loans, like the early 20th century version of a payday loan. There was this movement of largely elite and wealthy white women who were driven by some charitable impulse to try to curb this practice because they thought that it was leading to pauperism and it was encouraging people to be burdens on the state, and taking away from the public fisc. Consumer financial protection is initially local and it’s a way to regulate these small lenders who are making loans to people who are shut out of the conventional banking system. Here, you see the cost of delegation and the way that this is working is, credit is scarce. These institutions that we’ve delegated this public function to are unwilling to lend to these people. They have to turn to these fringe lenders. Those fringe lenders are borrowing from major financial institutions and then they’re borrowing at low cost and lending out at high cost. That’s kind of the basic arbitrage that they engage in and that arbitrage was causing these laborers in big cities, like New York and Chicago, to become impoverished.
That led to this early form of consumer protection that was driven by these bad anti-pauperist sentiments. It’s kind of like the rational charitable giving community. I forget what they’re called, Effective altruists. This is like the effective altruists. This is the proto-effective altruist community, and they give birth to consumer financial protection in the early 20th century. Then things really did shift in the 1930s and the 1940s during the New Deal. It’s like a really interesting and kind of understudied time. What happens there is, the focus shifts from these payday loans to credit selling, which was really pervasive at the time. What’s happening is you could go into retail stores, and you could buy goods and services on credit. A lot of the merchants who were selling you goods on time were operating outside of legal constraints. They were often marking up the goods at really high prices. You had this kind of price inflation that was occurring throughout the market as a result of price insensitivity and the ability of merchants to charge excessive prices. Then those merchants were selling this debt on the secondary market to finance companies.
You get this new consumer movement and this consumer movement, it actually involves many of the same actors from the early 20th century financial protection, but now, these people are justifying these moves in very different ways. They’re not anti-state, they’re pro state and on the academic level, they’re making macroeconomic arguments against predatory lending. They’re really arguing that this predatory lending through this credit selling is resulting in price inflation, and that price of inflation is undermining the distributive logic of the New Deal. There’s a much more diverse coalition as well. It wasn’t just rich, white women and proto effective altruists. you now have lots of women’s groups. Black housewives and Jewish housewives who were protesting and striking against price inflation, and these interests didn’t just result in hard law, but also, we started to develop an institutional framework to deal with these problems.
In the early New Deal, we had this thing called a consumer advisory board that was part of the National Recovery Administration, which became unconstitutional, but that was this big price setting institution at the federal level and that had a consumer component to it. Later in the New Deal, we had the Office of Price Administration that had a consumer division that was kind of a proto CFPB (Consumer Financial Protection Bureau). That consumer division’s big contribution to public thought was this project that OPA worked on with the Federal Reserve, that ended up promulgating this regulation, Regulation W, that set really broad and aggressive limits on merchant credit. These were the kinds of loans that were pervasive in the economy, and they set caps on how much you could charge, how much you could lend, what interest you could charge, etc. It was pursued for both consumer protection ends and these kinds of bigger macroeconomic justifications. This is like a massive, massive, price setting regulation.
Scott Ferguson
You suggest in your article that, if I’m remembering correctly, it was also somewhat democratic and participatory, and they set up all kinds of regional and local pricing and rationing boards. There were all kinds of organizations, from the big cities to small towns, that were participating in the understanding of, the contesting of, and the regulation of price setting, essentially.
Vijay Raghavan
Yes, that is correct. The Office of Price Administration was this federal price setting institution. A lot of it was justified as wartime rationing. It was like wartime rationing, but there were a bunch of people who had been advocating for these changes forever who now were sitting on the body that was doing a lot of the price setting.
To make sure that price setting would work, there were lots of local OPA offices that relied on citizen enforcement of these price setting mandates. At the federal level, the consumer division of the OPA was majority female. It was integrated. We have these stories of the New Deal, and this was kind of an aberration. It functioned differently. It had this broad pricing setting power. There were democratic aspects to the institutional design. Unlike the anti-paupers movement in the early 20th century, we weren’t confronting the problem of predatory lending at the margins of the financial system. We were taking on the problems of high cross credit, the center of the financial system, working in concert with the Fed to constrain the actions of the biggest financial institutions.
I think, to me, it’s a short-lived experiment, but it’s one where consumer protection interests are playing this big countervailing role in curbing the anti-democratic and regressive costs of delegation. That’s the New Deal. Then what happens is we get the second red scare, and all these people are chased out of government and they’re all communists. We end Regulation W and the Office of Price Administration closes and consumer financial protection interests at the federal level go dark for a little bit. It takes some time for consumer financial protection to resurface at that stage. A lot of the problems that existed in merchant selling continue to plague credit markets in the 60s and 70s. Now you have new civil rights organizations and second wave feminist organizations that are attacking these practices based on the grounds that financial institutions are discriminating on the basis of sex. They’re also discriminating on the basis of race. This is what Elizabeth Cohen calls the third wave consumer movement, which is the consumer activism in the 60s and 70s that isn’t just about consumer financial protection. It’s the big, broad, public agitation over problems in the consumer marketplace that leads to a wave of federal legislation that reshapes the way merchants market and sell goods and financial institutions price and issue credit.
William Saas
Well, that takes us, I think, toward the end of your article and the fourth movement or moments for consumer financial protection. I’m very conscious, and our listeners will also be very conscious if they’re listening close to this publication and as you acknowledge in your article, we are in the ashes of that movement. Maybe not the movement, but the Consumer Financial Protection Bureau is functionally defunct under the second Trump administration.
You note that a lot of what you are describing here, with regard to the redeemable and recoverable and the aspects of the CFPB that are worth holding on to and the impulses that drive them and recovering those from the kind of blanket claim that consumer financial protection is neoliberal writ large. So, yeah, the CFPB is kind of toast at the moment, but you are bringing us this piece in full knowledge of that, published in 2025. I may be interested offline to hear about your process of publishing this and watching all this happen. I wonder if there were some late edits made at the request of the editor, perhaps.
But you say you’re hoping that this piece will play some part in reconstructing and rebuilding a more robust, democratically accountable and hopefully more durable consumer financial protection institution of some sort, whether it’s the CFPB reanimated or something else. Could you walk us through that last portion where we have this hopeful recovery of this fourth movement of consumer financial protection alongside the razing of the CFPB under the second Trump administration. Where you would like to see us go if you. You mentioned earlier about the kinds of initiatives and policies that this new formation would need. Walking us through that last part of the article would be a great way to go.
Vijay Raghavan
Sure. Let me just finish the 20th century story. I’ll try to quickly finish it and lead up to an assertion. What you have in the 60s and 70s is this new consumer movement that is successful in many ways. They push for lots of new federal legislation to regulate consumer credit markets and consumer markets more generally. Now, that era is kind of viewed as a real failure because, one of the main things that I think that civil rights groups and secondary feminist groups are doing is they’re like, we have this progressive cross-subsidy that was created as a result of the New Deal. We make credit more affordable, but it doesn’t work. It doesn’t work if you’re black and it doesn’t work if you’re a woman and we need to change that. The problem is, we end up getting all these changes right as we’re entering this deregulatory era. We get all these changes and what those changes do is they mean that now people can get credit, but that credit is no longer used to address wealth inequality. It’s used to sharpen some of the problems that existed before.
One of the things that you see in some of the scholarship is to look at the anti-pauperist logic of early consumer financial protection work and then look at some of the failures of the third wave consumer movement and then argue that’s what this project is at a fundamental level. It just exists to legitimize and rationalize the worst aspects of lending. I think if you take a longer view, there’s the New Deal era, which we overlook. This was an era where we productively contested some of the anti-democratic and regressive costs of delegation. Third wave consumerism did have some radical impulses that were muted, where, particularly, black consumer groups were pushing for democratic control of the levers of credit. They got some measures, but those measures were kind of weak. I think they were really sensitive to the costs of excessive debt, however. What ends up happening is we end up going into the deregulatory era and problems with excessive debt get worse and worse and worse, and then we get the financial crisis, and we’re trying to repair this regulatory framework that was broken from about the late 1970s till 2010.
What ends up happening is we create this thing called the Consumer Financial Protection Bureau, which was Elizabeth Warren’s idea. It’s this new federal entity that was created in 2010 that operates as a hybrid between the FTC and a banking regulator. It has this broad enforcement authority over people who participate in the consumer financial marketplace and some small business lenders. It also has these bank regulator-like powers where it can examine and supervise financial institutions. It was created kind of by accident. If you believe what Adam Tooze writes in Crashed, which I think is probably correct, Ben Bernanke and Hank Paulson and the other one who I can’t remember right now, people are angry that we build up the banks and we’re not bailing out homeowners, and we are not going to nationalize the banks, but we’ll create this this dumb thing that Warren wants us to create as a way to appease some of these more radical demands.
Then we got the CFPB, and in its early years it was pretty modest in its ambition. What happens, starting around 2020, with the election of Biden and appointing Rohit Chopra as the director, the CFPB gets really aggressive and starts leveraging the power that it has to play this really antagonistic role against other banking regulators who have stopped acting to curb the cost of delegation and instead are trying to just entrench some of those costs. Not only is the CFPB much more active, but from 2009 until 2022, 2024, we have the development of debtor movements and not consumer movements, not people who are lobbying for access to cheaper credit to facilitate consumption, but people who are lobbying for the abolition of debt. This starts with Occupy Wall Street and shifts to The Debt Collective and their work on student debt and medical debt. What you start to see is both the CFPB and then some state analogs working alongside debtor movements to develop ideas about how we ought to regulate credit and what kind of debt should be canceled. It was imperfect, but you start to see the reconstruction of this institutional framework that has some nice democratic features to contest these anti-democratic and regressive aspects of delegation. I think if things went differently in this country we could have let that experiment play out more and we could have made that institutional architecture richer and more democratic and worked in a way to really contest the regressive federal control over our money supply. Things didn’t work out that way, and so, like, what now?
I guess I can say it online and you can see if you want to cut it or not. I had this idea in 2021, and it took me four years to write it. Towards the end, I was really racing to get it done because I was worried it was going to be out of date. I finished it in the summer of 2024, it ended up getting published in April 2025. At that point it’s weird how “The Radical Potential of Consumer Financial Protection” as a title is as, you know, my friends at the CFPB are looking for work. I’m not alone. I think that on a personal level it’s been hard to justify promoting that work, even though I think there’s value in the work. So, I’m really happy to be on this podcast. You see pictures online of dead children in Gaza and then you’re like, you can also check out my new paper. That said, what are some of the hopeful strands right now? The most hopeful thing on the horizon is, from my perspective, the Zohran Mamdani primary election here in New York City. If you look at his election and some of the other local Democratic officials that are getting elected, and some other DSA (Democratic Socialists of America) adjacent people, they’re putting out positive visions to address people’s material concerns. Their list of things that they’re trying to do includes a bunch of consumer financial protection stuff, and that’s kind of at the core of Mamdani’s antitrust, anti-corporate campaign. What’s the hopeful story? I don’t know what the hopeful story is.
My hope from this piece is that I want people to read it, but to try to offer a persuasive case to some people about the value of consumer financial protection to help them understand what role it plays in our modern regulatory environment. It functions as an antagonistic force to the ways the financial system entrenches the status quo. It ought to be confrontational and ought to be antagonistic. In order to be effective, you need institutions that have the capacity to confront other institutional actors that are entrenching the status quo. It has to have the legal authority to effectively counteract the power that other institutional actors have, and it has to be really democratically accountable. Also, the people who are facing the bad effects of delegation have to be able to get these institutions to behave in the way they want them to behave. My hopeful story is that we understand what the project is really about and what the best case for it is. We can use that knowledge to slowly reconstruct a new set of institutions that can operate in a way that really effectively constrains the power of financial institutions to entrench inequality.
Scott Ferguson
I want to talk a little bit about that. One of the ways in which your essay really spoke to me, and I’m curious to hear your feedback and if it makes sense to you, if you have thoughts about it. I’m going to grope a little bit, I don’t have all the words at my fingertips, but I’m going to try. One of the key premises of public money paradigms; legal, constitutional, monetary theory, etc., is not only that but private transactions are also, as you put it, downstream from political and legal design.
But that political and legal design or generative and constructive and constitutive, even when they’re doing evil. That productivity and that kind of world building can create zero sum outcomes and real pain and poverty, and it does, but at the same time, its conditions of possibility are not zero sum.
The conditions of possibility are not the market versus the state. I think many people have problematized that binary from all kinds of points of view, but I think that the legal money paradigm does it in one of, if not the most important and forceful ways. One of the moments I had when I started reading your piece was that it’s not zero sum all the way down. Consumption or purchasing power in the terms of being a purchaser of credit are as constitutive in a non-zero-sum way as anything else. One way of getting at this is to pose the question, on the one hand, consumer financial protection as a problem and as a paradigm and as a history is a symptom or a response to delegation.
One question I have that might open this up in a slightly different way is, let’s say we dramatically democratize the finance franchise or whatever we’re going to call it, the problem of delegation is no longer a giant problem. Of course, there’s no utopia. Problems always remain, but it’s so much better.
Is there still a place for consumer financial protection? As a non-expert on the outside, the lesson of your article is “yes,” because it’s still constitutive of how the whole system works. I don’t know how you would respond to that or if you would put pressure on any of the moves I’m making here.
Vijay Raghavan
That’s really interesting. I’ve thought about this. Something that legal scholars often ask, “Is this your first best world?” Is your ideal case a world in which there is no consumer financial protection? Because we have the people’s ledger and I think that in a world where we’ve eliminated the delegation problem and we have a fully public money paradigm that is democratically accountable. I don’t think you would need something that resembles what we have today. It would be embedded within that system.
Scott Ferguson
That’s what I was going to say, is that it would be embedded, but it wouldn’t necessarily disappear. The problems that consumer financial protection as its own special problem has been addressing. It’s not that you wouldn’t need to mediate those problems, it’s that they would be built into distribution as a design problem.
Vijay Raghavan
Yeah, I think that’s correct. I think that’s absolutely correct. The main body of literature that I was responding to is this macro sociology of credit and the way that it’s bubbled up in legal scholarship, but I was also responding to the money folks. The money folks do have very little to say about my world, which strikes me as strange. I think that as the money folks start to think about how we are going to democratize finance and build institutions that are democratically accountable, they really need to look at consumer financial protection, which has been like one site of political contestation over the kind of distributive and democratic stakes of the legal design of money. Maybe it’s not totally clear that consumer advocates and debtors understand that’s what they’re doing, but I think that’s what they’re doing. If you’re thinking about how we make some kind of public money paradigm democratically accountable, I think you need to look at this example. How can different groups actually exert meaningful power to put pressure on the allocation of money, and the price and cost of money in some kind of public system. If you understand that it’s been one side of political contestation over the distributed and democratic stakes of the legal design of money, and it’s going to continue to be as long as we have delegation – and I don’t think delegation is going away anytime soon, nor do I want to be totally incrementalist here – but I think it has value, even though that value is as a response to the the tensions at the heart of delegation. It’s a place where we can look to start to develop meaningful countervailing power to contest the problems with delegation and not look at it as something that’s just going to manage the problems of delegations at its margins.
I don’t know if that was fully responsive. I think that in a world where we have a public money paradigm that’s sufficiently democratically articulated, I don’t know if we need consumer financial protection. Outside of that world to the extent we have any kind of private provision of money, and that prevention is through the extension of credit, I think that we will need something like this, or we’ll have some something like this will emerge and the role that it plays is kind of dependent on how we understand what it is and how we develop it.
Scott Ferguson
No, that was really helpful. Thanks for indulging my rambling question. I have one more question that I wasn’t planning on asking, but it has surfaced putting together different parts of this interview. You talked about some of the early consumer financial protection movements being concerned with — and you used the word — inflation. I guess I’m wondering, has the post 2008 movement on the intellectual side, on the scholarly side or anywhere, have people put together the questions about the politics of inflation — especially since Covid — and these consumer financial protection fights, or has that been mostly missing in this fourth movement?
Vijay Raghavan
It’s a good question. I don’t know the answer to that just because price inflation has really kind of happened since I’ve been an academic. It’s something I’m interested in. The biggest new area of consumer credit is “buy now, pay later.” Historically, one of the earliest forms of credit that we had in the consumer marketplace was credit selling, which is just like the ability to buy goods or the ability to defer the purchase price of goods by buying goods on credit. Credit selling was this big problem throughout the 20th century and kind of disappears with the advent of credit cards and the expansion of credit cards to everybody and now it’s reappeared in a really big way through “buy now, pay later.” This is just taking this really old credit technology and kind of updating it for the online era. I don’t know if people have studied it, but I imagine that people are looking to regulate “buy now, pay later.” I don’t know if anyone’s made the this case very directly, but to the extent that people are concerned about price inflation in a world where merchants were selling goods on credit, you’d imagine that we ought to have the same concern today that if the biggest expansion of credit in the modern economy is “buy now, pay later” and that the expansion correlates with price inflation across the economy.
One might expect that some of that price inflation is attributable to consumer price incentive in the ability to defer those costs through extension of credit. I don’t know if that’s made it into the actual arguments that consumer advocates are making about regulating “buy now, pay later.” I don’t know if there’s any empirical evidence for that, but to the extent that we think price inflation is legally constructed I think this has to be a part of that story.
William Saas
I think it’s a good place to leave it. Vijay Raghavan, thank you so much for joining us on Money on the Left. I really enjoyed it.
Vijay Raghavan
Thank you both. Thanks for having me.
* Thank you to Robert Rusch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript.