Political Influence and TARP Investments in Credit Unions

35 Pages Posted: 29 Oct 2010 Last revised: 31 Oct 2012

See all articles by Elisabeta Pana

Elisabeta Pana

Central Connecticut State University

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: October 30, 2012

Abstract

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.

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

Suggested Citation

Pana, Elisabeta and Wilson, Linus, Political Influence and TARP Investments in Credit Unions (October 30, 2012). Available at SSRN: https://ssrn.com/abstract=1698945 or http://dx.doi.org/10.2139/ssrn.1698945

Elisabeta Pana

Central Connecticut State University ( email )

1615 Stanley Street
New Britain, CT 06050
United States

Linus Wilson (Contact Author)

University of Louisiana at Lafayette - College of Business Administration ( email )

Department of Economics & Finance
214 Hebrard Blvd., Room 326
Lafayette, LA 70504-0200
United States
(337) 482-6209 (Phone)
(337) 482-6675 (Fax)

HOME PAGE: http://www.linuswilson.com

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