POLITICS AND LENGTH OF TIME TO BANK FAILURE: 1986–1990

Autor: Christine Loucks, Randall W. Bennett
Rok vydání: 1996
Předmět:
Zdroj: Contemporary Economic Policy. 14:29-41
ISSN: 1465-7287
1074-3529
Popis: I. INTRODUCTION The 1980s and early 1990s mark a period of financial distress unparalleled in U.S. history since the Great Depression. From 1980-1992, 4,695 federally insured institutions with assets of $665 billion failed and were resolved at an estimated present-value cost of $165 billion (Barth and Jahera, 1994). Over the period, 1,142 savings and loans (SL Kane, 1989; Barth, 1991; White, 1991; Barth and Brumbaugh, 1992b; and Cebula, 1993). Many of these factors affect the institutional structure within which banks, credit unions, and S&Ls operate. Congress controls these factors that affect the financial services industry's structure. Thus, the relationships among Congress, financial institutions, regulators responsible for protecting the safety and soundness of the financial system, and taxpayers are extremely important. Becker (1983, p. 371) contends that pressure groups compete among one another for political favors and that "political equilibrium depends on the efficiency of each group in producing political pressure, the effect of additional pressure on their influence, the number of persons in different groups, and the deadweight costs of taxes and subsidies." Romer and Weingast (1991) and Bennett and Loucks (1993) apply this theory to the savings and loan industry to explain why delaying resolution of the failed S&Ls was advantageous to the stockholders, depositors, regulators, and politicians. …
Databáze: OpenAIRE
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