Political Influence and TARP Investments in Credit Unions
Illinois Wesleyan University
University of Louisiana at Lafayette - College of Business Administration
October 30, 2012
Forty-eight credit unions received capital injections as part of the financial sector bailout. The predicted probability of receiving bailout funds jumps from 29 percent to 81 percent for the typical credit union, if the institution’s headquarters was in the district of a member of the U.S. House Financial Services Committee (HFS). The credit unions receiving funds were significantly less likely to lend, contrary to the goals of the program. These results indicate that political influence may be an important determinant of which institutions receive taxpayer funds.
Number of Pages in PDF File: 35
Keywords: bailout, cooperatives, credit unions, CDCI, CDFI, Community Development Capital Initiative, Community Development Financial Institution, EESA, Emergency Economic Stabilization Act, politics, subordinated debt, SBLF, Small Business Lending Fund, U.S. House Financial Services Committee, TARP
JEL Classification: G21, G28, G38
Date posted: October 29, 2010 ; Last revised: October 31, 2012
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