Monday, June 13, 2011

Research Links Financial Crisis To Revolving-Door Lobbyists

Research Links Financial Crisis To Revolving-Door Lobbyists

Two economists at the International Monetary Fund crunched the numbers and determined lobbying by lenders and other U.S. financial interests encouraged the watering-down of regulations that contributed to the 2007 meltdown of the mortgage market.

Tracking the fate of federal legislation during the six years before the mortgage-driven financial crisis, the economists found that what mattered even more than the amount of lobbying was whether legislators were being lobbied by former members of their own staff.

In their article in the June edition of the IMF's Finance and Development magazine, researchers Deniz Igan and Prachi Mishra wrote, "in the period from 2000 to 2006, a bill that was unfavorable to the financial industry was three times less likely to become law than one promoting deregulation."

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