Open AccessA Public Choice Approach to the Unequal Treatment of Securities Market Participants and Home Borrowers
Author(s) -
Jonathan R. Macey
Publication year - 2017
Publication title -
rsf
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.979
H-Index - 17
eISSN - 2377-8261
pISSN - 2377-8253
DOI - 10.7758/rsf.2017.3.1.05
Subject(s) - private placement , hybrid security , secondary mortgage market , equity (law) , shared appreciation mortgage , business , debt , commercial mortgage backed security , broker dealer , blame , collateral , financial market , financial system , monetary economics , investment banking , economics , real estate investment trust , mortgage insurance , real estate , finance , law , medicine , political science , capitalization rate , casualty insurance , psychiatry , insurance policy
This article contrasts the protections provided to participants in U.S. securities markets with the protections provided to participants in the U.S. mortgage markets. Participants in securities markets purchase and sell equity and debt securities. Participants in the mortgage markets borrow money to buy homes, using those homes as collateral for the mortgage loans they receive. Even after Dodd-Frank, participants in securities markets are afforded significantly higher levels of protection than participants in mortgage markets. The doctrine of suitability is a prime example of this inequity. Exploring possible explanations for this odd asymmetry of treatment, I conclude that interest group politics is to blame for the anomaly