43 Pages Posted: 9 Jun 2010 Last revised: 15 Jun 2010
Date Written: June 9, 2010
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.
Keywords: subprime, politics, campaign contributions, lobbying
Suggested Citation: Suggested Citation
Mian, Atif R. and Sufi, Amir and Trebbi, Francesco, The Political Economy of the Subprime Mortgage Credit Expansion (June 9, 2010). Chicago Booth Research Paper No. 10-21. Available at SSRN: https://ssrn.com/abstract=1623004 or http://dx.doi.org/10.2139/ssrn.1623004
By John Lott