The Political Economy of the Subprime Mortgage Credit Expansion
Atif R. Mian
Princeton University - Department of Economics; Princeton University - Woodrow Wilson School of Public and International Affairs; NBER
University of Chicago - Booth School of Business; NBER
University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)
June 9, 2010
Chicago Booth Research Paper No. 10-21
We examine how special interests, measured by campaign contributions from the mortgage industry, and constituent interests, measured by the share of subprime borrowers in a congressional district, may have influenced U.S. government policy toward the housing sector during the subprime mortgage credit expansion from 2002 to 2007. Beginning in 2002, mortgage industry campaign contributions increasingly targeted U.S. representatives from districts with a large fraction of subprime borrowers. During the expansion years, mortgage industry campaign contributions and the share of subprime borrowers in a congressional district increasingly predicted congressional voting behavior on housing related legislation. The evidence suggests that both subprime mortgage lenders and subprime mortgage borrowers influenced government policy toward housing finance during the subprime mortgage credit expansion.
Number of Pages in PDF File: 43
Keywords: subprime, politics, campaign contributions, lobbying
Date posted: June 9, 2010 ; Last revised: June 15, 2010
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