Lawmakers' support for bank bailouts was correlated with their individual investment in banks

In The Personal Wealth Interests of Politicians and the Stabilization of Financial Markets, researchers from the London Business School and Tillburg University demonstrate the likelihood of US members of Congress voting in favor of bank bailouts was correlated with those politicians' individual investments in banking stocks.

Critically, the researchers tease out an overall support for the finance industry (which might lead politicians to both invest in, and vote in favor of, the banks) by comparing the voting records of Congress members who had once held bank stocks, but did not hold them at the time of the bailout votes.

Also positively correlated with bailout votes: members of Congress whose spouses' 401(k)s had lost value after the 2008 crisis.

The new data showing a correlation between wealth and policymaking emerges at a moment when federal offices are increasingly held by the rich. In the current Congress, the median lawmaker’s net worth is more than $1 million -- and 271 of the 533 members are millionaires. Meanwhile, president-elect Donald Trump has appointed a Cabinet of corporate moguls, CEOs and wealthy political figures whose combined net worth is more than $14 billion.

The Personal Wealth Interests of Politicians and the Stabilization of Financial Markets [Ahmed Tahoun and Laurence van Lent/Institute for New Economic Thinking]

Lawmakers Who Owned Bank Stock Were More Likely To Vote For Wall Street Bailout: Study [David Sirota/International Business Times]

(via Naked Capitalism)

Notable Replies

  1. Well, color me surprised. And here I thought they only had the best interests of the country at heart.

  2. trump's massive collection of conflicts of interest? I'm sure those lawmakers are gonna get right on that.

  3. Trumpist reading: Losers with no bank holdings are just jealous and hate banks for rejecting them and wanted to see them fail. Sad.

  4. so how much more bad can it get before the people rise up to change things? Or are we so divided it's better to split the country and go separate ways?

  5. I still believe we have a chance together, that we're more than the sum of our parts. It's time to work on our communication trouble, though. Splitting up won't leave us any better in the long run if we don't address our cultural aversion to hard, meaningful conversation.

    People suffering under our current system can't afford to wait and shouldn't have to wait for national change to get relief from the issues our income inequality and communication issues have caused. We need to work locally now to relieve that pain. If we address those "home" issues, it'll bring voices back into the conversation who aren't being heard today because they're spending all their energy and resources surviving.

    We're stronger with all our voices but we've never had all our voices. We've always been less than we could be.

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