Preventing Another Financial Crisis: The Critical Role of Consumer Protection Laws
James P. Nehf
Indiana University Robert H. McKinney School of Law
July 17, 2012
Indiana University Robert H. McKinney School of Law Research Paper No. 2012-15
This paper explains in summary form how the weakening of consumer credit laws in the United States contributed to the financial crisis and argues that strong consumer laws are essential to economic stability. The paper discusses how changes in the residential mortgage laws in the United States led to excessive holdings in toxic assets held by Wall Street investment bankers. When the assets lost value, Wall Street firms lost hundreds of millions in highly leveraged holdings, sending the world economy into economic recession.
Number of Pages in PDF File: 12
Keywords: financial crisis, Wall Street, mortgage backed securities, leverage, toxic, Lehman Brothers, tranches, consumer protection, FDIC, ratings firms, Moody's, Fitch, Standard & Poorsworking papers series
Date posted: July 18, 2012 ; Last revised: August 16, 2012
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