The Durability of Legislative Benefits and the Role of the Executive Branch's Settlement Authority

The Journal of Private Enterprise, Forthcoming

18 Pages Posted: 15 Feb 2018 Last revised: 24 Mar 2018

See all articles by Bryan Cutsinger

Bryan Cutsinger

George Mason University, Department of Economics

Date Written: February 2, 2018

Abstract

Following the 2008 Financial Crisis, the U.S. Department of Justice required several large financial institutions to pay large cash settlements for their role in collapse of the residential mortgage-backed securities market. A fraction of these cash settlements was instead funneled to government-approved nonprofit beneficiaries, many of whom had had their government grants reduced by Congress. I argue that this transfer is an insurance contract that the government uses to improve the durability of contracts between special interest groups and the legislature.

Keywords: Separation of Powers, Contractual Durability, Rent Extraction, Administrative State, Bank Settlements

JEL Classification: D72, D73, H27, P16

Suggested Citation

Cutsinger, Bryan, The Durability of Legislative Benefits and the Role of the Executive Branch's Settlement Authority (February 2, 2018). The Journal of Private Enterprise, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3116603 or http://dx.doi.org/10.2139/ssrn.3116603

Bryan Cutsinger (Contact Author)

George Mason University, Department of Economics ( email )

Fairfax, VA
United States

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

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