Preventing Another Financial Crisis: The Critical Role of Consumer Protection Laws

17 Pages Posted: 18 Jul 2012 Last revised: 8 Sep 2016

See all articles by James P. Nehf

James P. Nehf

Indiana University Robert H. McKinney School of Law

Date Written: July 17, 2016

Abstract

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.

Keywords: financial crisis, Wall Street, mortgage backed securities, leverage, toxic, Lehman Brothers, tranches, consumer protection, FDIC, ratings firms, Moody's, Fitch, Standard & Poors

Suggested Citation

Nehf, James P., Preventing Another Financial Crisis: The Critical Role of Consumer Protection Laws (July 17, 2016). Indiana University Robert H. McKinney School of Law Research Paper No. 2012-15, Available at SSRN: https://ssrn.com/abstract=2111776 or http://dx.doi.org/10.2139/ssrn.2111776

James P. Nehf (Contact Author)

Indiana University Robert H. McKinney School of Law ( email )

530 West New York Street
Indianapolis, IN 46202
United States

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