The Political Economy of the U.S. Mortgage Default Crisis

Atif Mian, Amir Sufi and Francesco Trebbi

No 14468, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the determinants of congressional voting behavior on two of the most significant pieces of federal legislation in U.S. economic history: the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Emergency Economic Stabilization Act of 2008. We find evidence that constituent interests and special interests influence voting patterns during the crisis. Representatives from districts experiencing an increase in mortgage default rates are significantly more likely to vote in favor of the AHRFPA. They are precise in responding only to mortgage related constituent defaults, and are significantly more sensitive to defaults of their own-party constituents. Increased campaign contributions from the financial services industry is associated with a higher likelihood of voting in favor of the EESA, a bill which transfers wealth from tax payers to the financial services industry. We also examine the trade-off between politician ideology and constituent and special interests, and find that conservative politicians are less responsive to constituent and special interest pressure. This latter finding suggests that politicians, through ideology, can commit against intervention even during severe crises.

JEL-codes: D72 G21 L51 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-ure
Note: POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as Atif Mian & Amir Sufi & Francesco Trebbi, 2010. "The Political Economy of the US Mortgage Default Crisis," American Economic Review, American Economic Association, vol. 100(5), pages 1967-98, December.

Downloads: (external link)
http://www.nber.org/papers/w14468.pdf (application/pdf)

Related works:
Journal Article: The Political Economy of the US Mortgage Default Crisis (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:14468

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w14468

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().