Although it probably shouldn’t surprise anyone, it’s nonetheless interesting to see a group of International Monetary Fund (IMF) staff have reported (although this is not a statement of IMF policy, necessarily) that the US banks most active in lobbying against regulation of the financial sector are the ones who took the biggest risks over the mortgage and other deals which caused the crisis. Their paper explores the evidence behind the‚Ä¶
“anecdotal evidence [which] suggests that the political influence of the financial industry contributed to the 2007 mortgage crisis, which, in the fall of 2008, generalized in the worst bout of financial instability since the Great Depression.”
As Owen Tudor on the TUC blog concludes:
It’s a fantastic paper, forensic and damning, which explores other, more innocent explanations for the data. Innocence is not what they found‚Ä¶..
“To the best of our knowledge, this is the first study to examine empirically the relationship between lobbying by financial institutions and mortgage lending in the run-up to the financial crisis. We construct a unique dataset combining information on mortgage lending activities and lobbying at the federal level by the financial industry. By going through individual lobbying reports, we identify lobbying activities on issues specifically related to rules and regulations of consumer protection in mortgage lending, underwriting standards, and securities laws.”
Of course that gives rise to the question "what do you do about it?"
Well, in the first instance simply knowing empowers politicians to ignore them.