The $700 Billion Bailout: A Public-Choice Interpretation

42 Pages Posted: 21 Jan 2009 Last revised: 14 Sep 2014

See all articles by Carlos D. Ramirez

Carlos D. Ramirez

George Mason University - Department of Economics

Date Written: January 19, 2009

Abstract

On September 29, 2008, the House of Representatives voted to reject HR 3997 (known as the original $700 Billion Bailout Bill). On October 3, the House reversed course and voted to approve the Emergency Economic Stabilization Act of 2008 (EESA). This paper applies a political voting model to these two House votes - the rejection of the bill on September 29 and its passage on October 3. Both economic conditions and PAC contributions matter in explaining the two votes, but their effect is attenuated by legislator's power. PAC contributions from the American Bankers Association appear to matter for explaining the legislators who switched. The role of ideology in explaining either the September 29 or October 3 vote is limited.

Keywords: Bailout Bill, voting model, power rankings, Emergency Economic Stabilization Act, big banks, PAC, event study

JEL Classification: D72, E44, G14

Suggested Citation

Ramirez, Carlos D., The $700 Billion Bailout: A Public-Choice Interpretation (January 19, 2009). Available at SSRN: https://ssrn.com/abstract=1330155 or http://dx.doi.org/10.2139/ssrn.1330155

Carlos D. Ramirez (Contact Author)

George Mason University - Department of Economics ( email )

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