American Predatory Lending and the Global Financial Crisis (2020-2021)
Ten years after the failure of Lehman Brothers – the event commonly viewed as ground zero of the financial crisis – there is still debate about the causes of the crisis and the efficacy of policy responses. However, there is little debate about the central role subprime home loans originated by mortgage brokers and banks played in the crisis.
Abusive and predatory conduct in the home loan market was a matter of concern for policymakers well before the crisis, but the Federal Reserve did not fully implement powers to regulate the mortgage market conferred on it by Congress. Many state and local governments did enact legislation in response to abusive and predatory conduct in the low- and moderate-income market by mortgage brokers and bankers.
A common explanation for federal policymakers’ failure to act and opposition to state action was a concern about creating a “patchwork quilt” of regulation that would restrict access to credit. However, state and local governments saw abuses in the mortgage market as a signal that something was wrong. This project will explore these divergent responses and the implications for preventing the next financial crisis.
Building on the work of the 2019-2020 project team, this project seeks to deepen the public’s understanding of the policy and market dynamics in the run-up to the financial crisis and explain the divergent responses among federal and state/local policymakers as well as the implications for preventing the next financial crisis. Team members will achieve this objective through a multi-method and interdisciplinary exploration of signals and stories in the run-up to the Crisis.
In 2019-2020, the team began collecting and analyzing mortgage market data and media coverage in North Carolina in the decade leading up to the financial crisis. In 2020-2021, team members will continue data collection and analysis by expanding the project’s geographic scope. To do this, the team will focus on the Sun Belt states and other regions where the housing market experienced especially pronounced price increases before the crisis and particularly dramatic declines afterward.
Members of the team will also collect oral history interviews to chronicle the human experiences of the crisis at the state-level, beginning with North Carolina. These interviews will include a variety of stakeholders, such as regulators, bankers, community groups and NGOs, real estate agents, mortgage brokers and borrowers.
Interactive website; blog posts; policy papers; journal articles
Fall 2020 – Spring 2021
- Fall 2020: Review Data+ analysis; develop research agenda; develop interview strategy; conduct oral history interviews
- Spring 2021: Conduct comparison policy analysis; review and analyze oral histories; produce policy briefs; conclude archivization
This Team in the News
See earlier related team, American Predatory Lending and the Global Financial Crisis (2019-2020), and Data+ summer projects, American Predatory Lending and the Global Financial Crisis (2020) and American Predatory Lending and the Global Financial Crisis (2019)
Image: Sign of the times, foreclosure, by Jeff Turner, licensed under CC BY 2.0
- Edward Balleisen, Sanford School of Public Policy|Arts & Sciences-History
- Lee Reiners, Duke Law-Global Financial Markets Center
- Joseph Smith, Former North Carolina Commissioner of Banks
/yfaculty/staff Team Members
Sara Greene, Duke Law
Sarah Bloom Raskin, Rubenstein Fellows Academy