A late end-of-year entry for the 2009 Claude Raines Award goes to a study just released by two economists at the University of Michigan finding that banks with political connections were more likely to get TARP funds than those without them.
“Our results show that political connections play an important role in a firm’s access to capital,” said Denis Sosyura, who — along with Ran Duchin — authored the study.
It’s a stunningly unsurprising result. Just imagine: politics affecting who gets federal bailout money. Who would have guessed?
When you get past the initial non-shock, however, the study does provide some interesting detail on the corrolation between political influence and bailouts. A one standard deviation increase in political contributions for instance, was associated with a $14.6 increase in TARP funding. Similarly, a one standard deviation increase in lobbying amounts corrolated with an extra $10.4 million increase.
There is of course always a question of causation. It could be argued that banks in need of government assistance naturally are also more politically attuned, and thus the additional funding they wasn’t because of their political involvement.
That doesn’t seem to explain one curious finding of the report however: banks with headquarters located in the district of a member of the House Financial Services Committee were 26 percent more likely to receive TARP funds than those not so geographically favored.
A beautiful friendship indeed.
Statistics is used to test hypotheses with the result that a sometimes obvious hypothesis is invalidated or validated. The researchers may have found a result obvious to the author, but: 1) Could the author have quantified the magnitude of the result or the error bars?; 2) Could the author have formed and tested the joint hypothesis concerning geography and seated member location in order to arrive at the result; 3) Could the author have arrived at the conclusion that even smaller banks benefited, contrary to expectations…a result the author has entirely omitted which goes to the heart of statistical testing: finding and validating out of sample results.
In other words, reporting surprise at the non-surprising result be treated as a noteworthy result reflects on the author's innumeracy, not the putatively mundane conclusion.
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I am Shocked! Shocked! that anyone connected to this administration got a better deal.
As Obama said;I owe them.I am one of them;in a Union Convention.UAW got the benefits of Democratic Majority,so did the S.E.I.U.and other unions.They contributed to his war chest heavily and voted for him.Therefore the other contributers will see the Fruits of their Investments.
Some additional data & charts would have been awesome here.
There have already been rumblings on this subject, but UNLIKE our propaganda-loving, enemy-demonizing, left-wing mainstream media, I prefer to base my opposition on facts and the truth.
Hard to do that with this…
(Where Government goes, waste and corruption always abound)
What's so surprising about politically connected organizations getting more help than those not connected. It's a fact of life. The bigger the political donation the bigger the payback. Regardless of Obama's promise of transparency in government, it seems the definition of transparency has been changed … Although the window is transparent the room is in complete darkness and those working in the room are using night-vision goggles.
Does this suprise anyone. Look at the car dealers, when Obama took over GM. If you voted for Obama, you kept your dealership, if not, you lost it. Very simple, we have a administration that if you aren't on their side, you will be destroyed!
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You can't tell me your surprised at yet another STUPID survey, when you have all the people advising bho such as avelrod,stern,emanuel and the list goes on.Why would anyone be surprised? Well if you are brace yourself there certainly will be more. These are very corrupt people their like a cancer just eating our country piece by piece. My mother was a democrat and used to say they were for the poor people the republicans only cared about the rich. If she were alive today I wonder how she would feel about her party. Unfortunately,there are still many just like she was. They live and believe these people in government today are doing everythin in their interest, I find this all very very sad. It's been said bho is destroying the party,maybe so but the alternative are the progressives I ask you which one is worse? We know the answer their all bad. We need to ban together to change all of it.
Most likely, those two economists at the University of Michigan never saw Casablanca, so the Claude Raines award has probably gone right over their heads.
Turn over any stone in Washington Disease and you will find Politics beneath it.
Since TARP & bailouts are the topic and those who accepted the bailouts were then told what they could pay their executives, I have a question regarding other recipients of like funds. Why did I not see those w/ FannieMae & FreddieMac on the list of companies whose executives' compensation is now government regulated? Those two organizations and their policies were at the heart of the financial crisis and the only thing I've seen is that they are both in line again to receive more money … and that the same policies of correcting perceived social injustice by forcing financial institutions to lend money to suspect borrowers continues. Am I the only one who is seeing this?
Bill from Texas you are not the only one who sees the corrupt behavior of the current administration. Those running FannieMae & FreddieMac should be in jail. God will get them some day.
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The crooks are in WDC! How soon can we send them all of jail?
The only reason they could get away with this, is if they work for the government.
Oh, they do!