Georgia's anti-predatory-lending law: issuers and investors in mortgage pools held liable for abusive loans.
Back in 2003, for example, Georgia's legislature enacted one of the toughest predatory-lending laws in the nation. Part of the law allowed issuers of and investors in mortgage pools to be held liable if the loans were found to be abusive. Shortly after that law went into effect, the ratings agencies refused to rate mortgage securities containing Georgia loans because of this potential liability. The law was soon rewritten to eliminate the liability, allowing predatory lending to flourish.
BUSINESS DAY
Hey, S.E.C., That Escape Hatch Is Still Open
By GRETCHEN MORGENSON
Published: March 5, 2011
Although the S.E.C. calls itself "the investor's advocate," it's still not enforcing a rule governing credit ratings agencies.