St. Louis Fed's Review: The Varying Effects of Predatory Lending Laws on High-Cost Mortgage Applications; The Rise in Personal Bankruptcies: The Eighth District and Beyond; Regional Business Cycles in Japan; Milton Friedman, 1912-2006: Some Personal Reflections; Understanding the Fed

ST. LOUIS — The January/February issue of Review, the Federal Reserve Bank of St. Louis' journal of economic and business issues, features the following articles. The publication is also available on the St. Louis Fed's web site: www.stlouisfed.org.

• "The Varying Effects of Predatory Lending Laws on High-Cost Mortgage Applications." Buying a home is one of the biggest financial transactions that many Americans will ever make, but even highly educated professionals have trouble understanding all the obligations and warranties associated with the purchase of a home mortgage. Many cities, states and even counties have passed laws meant to protect consumers from predatory lending practices in the purchase of a home. Researcher Giang Ho and economist Anthony Pennington-Cross look at the results of those laws. They find that the laws in some states increased the size of the high-cost mortgage market, while others have reduced it.
• "The Rise in Personal Bankruptcies: The Eighth District and Beyond." Between 1980 and 2005, personal bankruptcy filings in the United States increased per capita nearly 350 percent. Focusing primarily on statistics for the seven states of the Federal Reserve's Eighth District, economist Thomas A. Garrett looks at the economic and institutional changes that are the likely contributors to this dramatic rise: a reduction in personal savings, an increase in consumer debt, the proliferation of revolving credit, changes to bankruptcy law, and a reduced social stigma associated with bankruptcy. He suggests financial education as one potential key to reversing the decreasing social stigma and, thus, reducing the demand for personal bankruptcies.
• "Regional Business Cycles in Japan." Economist Howard J. Wall, who served as a visiting scholar at the Institute for Monetary and Economic Studies of the Bank of Japan, uses an economic model to characterize and compare regional business cycles in Japan from 1976-2005. He shows that an early 1990s structural break meant a reduction in national and regional growth rates in expansion and recession, usually resulting in an increase in the difference between the two phases. Although recessions tended to occur across a majority of the country's regions throughout the time frame, he concludes that the occurrence and lengths of recessions at the regional level have increased over time.
• "Milton Friedman, 1912-2006: Some Personal Reflections." In 1959, William Poole, the president of the Federal Reserve Bank of St. Louis, went to the University of Chicago for graduate study, where he audited Milton Friedman's course on price theory. Recalling the man's legendary work in economics and his personality, as well as the encouragement of his own research, Poole notes that Friedman's passing meant the world lost "a giant intellect and a fine human being."
• "Understanding the Fed." This is a reprint of a speech delivered on Aug. 31, 2006, by William Poole, the president of the Federal Reserve Bank of St. Louis, to the Dyer County Chamber of Commerce annual membership luncheon in Dyersburg, Tenn.

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