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Banks with political ties got bailouts, study shows
U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.

Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business.

Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds.

Political influence was most helpful for poorly performing banks, the study found.
I don't really understand these things, but if the poorly performing banks had kept their funds in reserves instead of spending it on lobbying, wouldn't they have done better... as functioning banks, I mean.
Depends on whether their return on the lobbying investment exceeded the return they would get on keeping the assets inhouse
Your question was a rhetorical one, right TW?
I'm a simple soul, and my lack of understanding of financial matters gives Mr. Wife many troubled moments. No doubt there are subtleties I'm missing.
"Political connections play an important role in a firm's access to capital," Sosyura, a University of Michigan assistant professor of finance, said in a statement.

Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP's Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.

As of late September, nearly 700 financial institutions had received bailouts of $205 billion under the capital purchase program, the study said.

The banking industry has long been criticized for using political influence to obtain bailouts.

Scott Talbott, a senior vice president with industry lobbying group The Financial Services Roundtable, said the study was skewed because it did not exclude nine of the largest banks that were "strongly asked" by the government to take bailouts.

Those banks included Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N), and Morgan Stanley (MS.N) -- all of which repaid their bailouts in June.
Posted by: Fred 2009-12-23
http://www.rantburg.com/poparticle.php?ID=286214