Power-Balancing: State Attorneys General and Unfair Mortgage Lending

Kirsch, Larry

doi:10.2478/irfc-2024-0003

Abstract

This paper is a case study in the enforcement of state unfair trade practice laws targeted at predatory mortgage lending and securitization abuses during the Global Financial Crisis of 2008. It considers how the Massachusetts Attorney General’s Office (MA-AG) leveraged its dual mission as People’s Lawyer and State General Counsel to achieve robust public safeguards and more equitable buyer-seller market relationships. It explains how the MA-AG spliced its consumer protection authority over improvident risk and unfair loan originations with its investor protection authority over faulty securitization practices to multiply their combined impact. Although some pre-2008 credit practices have disappeared, others persist in altered forms and still others are sure to emerge in the future. For that reason, the consumer protection power-balancing strategy has considerable importance for the future safety and equity of consumer practices and demonstrates the role state attorneys general offices can play to protect the marketplace.

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Power-Balancing: State Attorneys General and Unfair Mortgage Lending

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