IMF's A Fistful of Dollars: Lobbying and the Financial Crisis finds (gasp) that the riskiest...

|By:, SA News Editor

IMF's A Fistful of Dollars: Lobbying and the Financial Crisis finds (gasp) that the riskiest U.S. lenders were also the fiercest lobbyists against regulations related to mortgage lending.
"Our findings indicate that lobbying is associated ex-ante with more risk-taking and ex-post with worse performance. This is consistent with several explanations, including a moral hazard interpretation whereby lenders take up risky lending strategies because they engage in specialized rent-seeking and expect preferential treatment associated with lobbying."