Massachusetts Attorney General Martha Coakley has become the first to throw her hat in the ring and announce a run for Ted Kennedy's senate seat. Coakley, a career prosecutor, made her name pursuing big financial institutions that took advantage of mortgage borrowers during the housing bubble. Here's a profile of her work I wrote earlier this spring:Coakley's work today, though, is anything but the norm – she's still finding ways to hold lenders accountable for predatory loans. Her office issued emergency regulations last year to prevent criminals from taking advantage of troubled borrowers with schemes that rob of them of their cash and their homes while offering to protect them from foreclosure. Her team has also investigated mortgage lenders, securing a $50 million settlement from Goldman Sachs to modify predatory loans owned by the bank, along with a $10 million payment to the commonwealth. Her team also secured an injunction to prevent Fremont Investment & Loan, a lender that offered predatory loans, from foreclosing on its customers.... "It's much cheaper to build in the safeguards than to try and send out subpoenas and bring out a criminal charge against someone who had violated the law," she says. She doesn't buy the argument that smart regulations prevent an efficient financial system; when her office issued consumer protection regulations in 2007, a number of banks protested, but only one stopped doing business in the state altogether because of the new requirements. That bank was Indymac, which would soon go under completely as a result of its bad practices and risky mortgage portfolio.Though Coakley and her fellow attorney generals are focused on figuring out exactly how lenders did business and hope to mitigate the damage caused by risky mortgage lending through regulatory enforcement and investigation, their efforts don't rule out criminal prosecution, either. The discovery of criminal intent in the course of those investigations could lead to indictments. Coakley's office has charged small-time mortgage schemers, but it's much more difficult to battle the pernicious institutional structures at the top of the system. But like the rest of the country -- Congress seems ready to authorize a special commission to investigate the financial crisis -- she wants, more than anything, to get to the bottom of this mess."You cannot prevent this from happening again in the future without doing an autopsy," she says.Not a bad record to run on in this political climate. If she comes to Washington, Coakley would likely be an important voice for more transparency in the financial sector and better protection for consumers. This race, however, is sure to be a tough one, given the large number of senior House Democrats in the state who haven't had a chance for advancement thanks to Kennedy and John Kerry holding their senate seats for so long. And that's just the primary -- while it's hard to imagine a Republican taking a Massachusetts seat, stranger things have happened. Apparently, former Red Sox pitcher Curt Schilling is thinking (not too seriously) about taking a swing at the senate seat as well.
-- Tim Fernholz
