Professors Brian Feinstein, Chen Meng, and Manisha Padi took a look at that question from one angle in State Attorneys General & Lender Behavior. Here is the abstract:
The Dodd-Frank Act empowers state attorneys general to enforce, with limited exception, both state and federal laws concerning predatory lending, unfair and deceptive practices, information disclosure, and mortgage servicing. During the debate over Dodd-Frank’s passage, the Act’s drafters argued that these dual-enforcement provisions provided a safeguard: should the federal government scale back its consumer-protection activity, the states could help fill the void. Dodd-Frank’s critics, however, warned that the placement of this substantial enforcement authority in the hands of partisan attorneys general could subject lenders to inconsistent law-on-the-ground within a given state, as successive attorneys general — each with his or her own party-driven priorities — enter office.
This Article puts this critique to the test. Viewing lenders’ observed behavior as a window into their expectations about enforcement levels, we utilize a dataset of every residential mortgage originated between 2004 and 2013 to examine whether lender activity changes following a switch in the partisan identification of a state’s attorney general.
We find no evidence that the attorney general’s party has an impact on mortgage markets. When one controls for other factors, lenders’ behavior is not materially different in states with a Republican versus a Democratic serving as attorney general. Essentially, dual enforcement does not mean inconsistent enforcement.
