Political Influence and TARP Investments in Credit Unions

Pana, Elisabeta; Wilson, Linus

doi:10.2139/ssrn.1698945

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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

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration

There 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: 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