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The $700 Billion Bailout: A Public-Choice Interpretation

Carlos D. Ramirez

George Mason University - Department of Economics; FDIC, Division of Insurance and Research

January 19, 2009

On September 29, 2008, the House of Representatives voted to reject HR 3997 (known as the original $700 Billion Bailout Bill). On October 3, the House reversed course and voted to approve the Emergency Economic Stabilization Act of 2008 (EESA). This paper applies a political voting model to these two House votes - the rejection of the bill on September 29 and its passage on October 3. Both economic conditions and PAC contributions matter in explaining the two votes, but their effect is attenuated by legislator's power. PAC contributions from the American Bankers Association appear to matter for explaining the legislators who switched. The role of ideology in explaining either the September 29 or October 3 vote is limited.

Number of Pages in PDF File: 42

Keywords: Bailout Bill, voting model, power rankings, Emergency Economic Stabilization Act, big banks, PAC, event study

JEL Classification: D72, E44, G14

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Date posted: January 21, 2009 ; Last revised: September 14, 2014

Suggested Citation

Ramirez, Carlos D., The $700 Billion Bailout: A Public-Choice Interpretation (January 19, 2009). Available at SSRN: http://ssrn.com/abstract=1330155 or http://dx.doi.org/10.2139/ssrn.1330155

Contact Information

Carlos D. Ramirez (Contact Author)
George Mason University - Department of Economics ( email )
4400 University Drive
Enterprise Hall MSN 3G4
Fairfax, VA 22030
United States
703-993-1130 (Phone)
703-993-1133 (Fax)
FDIC, Division of Insurance and Research
550 Seventeenth Street, NW
Washington, DC 20057
United States
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