Political Lending: Lawmakers Overseeing Wall Street Given Bigger, More Favorable Loans Than Others
Lawmakers Overseeing Wall Street Given Bigger, More Favorable Loans Than Others: Study
It is good to be king, as the old saying goes — and apparently it’s also good to get a seat on a congressional committee that oversees the finance industry. According to a new study, those lawmakers tend to get larger loans and at more favorable interest rates right when they get appointed to those powerful panels. Researchers suggest the evidence is no random coincidence: They say the trend may in fact expose a conduit of influence peddling in which powerful lawmakers are using their position to extract favors — and whereby Wall Street firms may be using stealth perks to increase their legislative power.
The analysis from London Business School professors Ahmed Tahoun and Florin Vasvari analyzed how the personal finances of congressional lawmakers changed once they were appointed to the Senate Finance Committee, the Senate Banking Committee or the House Financial Services Committee. It also evaluated how their finances compared with other lawmakers who are not on those panels.
In evaluating lawmakers from 2004 to 2011, the researchers found that finance committee members’ personal borrowing tended to jump in the first year they were appointed to the panels — a trend not seen for other lawmakers who were given seats on other powerful committees. Similarly, the data show that upon joining the finance panels, lawmakers tended to be given 32 percent more time — or on average 4 and a half years more — to pay back those new debts than loans they previously had and that other members of Congress have.
The study found that lawmakers also “report more favorable debt terms when they join the finance committee, relative to other years and to the terms other congressional members obtain including those on other powerful committees.”
Copy of the Study below…