Wednesday, December 30, 2009

The IMF does a report

On US lenders and mortgage lending leading to the Great Bush Depression. When it comes out with a title like this, "A Fistful of Dollars: Lobbying and the Financial Crisis," the findings are what you might expect.
"Lenders that lobby more intensively on these specific issues have (i) more lax lending standards measured by loan-to-income ratio, (ii) greater tendency to securitize, and (iii) faster growing mortgage loan portfolios," the report said.

"Ex post, delinquency rates are higher in areas in which lobbying lenders' mortgage lending grew faster, and, during key events of the crisis, these lenders experienced negative abnormal stock returns,"

The IMF economists said lenders that spent millions of dollars lobbying also expect preferential treatment.

"Such preferential treatment could be a higher probability of being bailed out, potentially under less stringent conditions, in the event of a financial crisis," they said.

Their studies showed that in the current crisis, 16 of the 20 lenders that spent the most on lobbying between 2000 and 2006 received financial bailouts from the government.

In total, lenders that lobbied on specific issues received almost 60 percent of the funds allocated under the U.S. government's Emergency Economic Stabilization Act set up by the Bush administration to rescue banks from failure.
Is it any wonder that we haven't seen the perp walks that is a better society would be coming daily.

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