Polarized Politics, Stable Markets: The Case of State Attorneys General & Mortgage Lenders

55 Pages Posted: 17 May 2019 Last revised: 23 Jun 2019

See all articles by Brian D. Feinstein

Brian D. Feinstein

University of Pennsylvania, The Wharton School

Chen Meng

University of Chicago - Law School

Manisha Padi

University of Chicago - Law School

Date Written: 2019

Abstract

Partisan polarization may subject market participants to inconsistent law-on-the-ground, as successive officials—each with their own party-driven priorities—enter office. To assess this concern, this article studies the effect of party switches in state attorneys general (AGs)—who are charged with enforcing key federal and state mortgage-lending and consumer-protection laws—on mortgage lenders’ activities. Viewing lenders’ observed behavior as a window into their expectations about enforcement levels, we utilize detailed data on residential mortgages to examine whether lender activity changes following a switch in the partisan identification of a state’s AG.

Overall, we find little to no evidence that an AG’s party has a significant impact on mortgage markets. Most models indicate that lenders’ behavior is not materially different in states with a Republican AG versus a Democrat. In the face of an increasingly partisan climate in which state attorneys general operate, mortgage markets display a remarkable degree of stability.

Keywords: mortgage lending, consumer protection, consumer law, empirical legal studies, mortgage finance, attorney general, financial regulation

Suggested Citation

Feinstein, Brian D. and Meng, Chen and Padi, Manisha, Polarized Politics, Stable Markets: The Case of State Attorneys General & Mortgage Lenders (2019). Available at SSRN: https://ssrn.com/abstract=3385963 or http://dx.doi.org/10.2139/ssrn.3385963

Brian D. Feinstein (Contact Author)

University of Pennsylvania, The Wharton School ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States

Chen Meng

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Manisha Padi

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

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