Political Influence and TARP Investments in Credit Unions

26 Pages Posted: 3 Sep 2011

See all articles by Linus Wilson

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2011

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 out their deposits, 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

Wilson, Linus, Political Influence and TARP Investments in Credit Unions (September 1, 2011). Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1921333 or http://dx.doi.org/10.2139/ssrn.1921333

Linus Wilson (Contact Author)

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

Department of Economics & Finance
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Lafayette, LA 70504-0200
United States
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