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Politics Drove TARP Investments!? What!?

Adrian Moore
November 1, 2010, 9:53am

A working paper by Linus Wilson at the University of Louisiana finds:



Forty-eight credit unions received capital injections as part of the financial sector bailout. The predicted probability of receiving bailout funds jumps from 23 percent to 76 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.

Not surprising to someone who knows how Congress works, but clearly contrary to all the protestations of Congress and the Administration that TARP was all about economic priorities.  You can download the paper here.


Adrian Moore is Vice President, Policy


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