The vote to authorise TARP last October counfounded traditional notions of party and ideology. Here you had the Congressional Democratic leadership, siding with their arch-enemy, President Bush, on behalf of a scheme to transfer more money to the banking industry — not traditionally a big Democrat constituency. The opposition were rank-and-file Republicans — the party sometimes described as the party of business.
So why did each Congressman vote the way they did?
Stats genius Nate Silver, who nailed the Presidential results better than anyone else, crunched the numbers to figure out what factors might explain a politician’s inclination to vote either for or against the bill.
Among his findings:
- Retiring politicians were more likely to vote for TARP.
- Politicians in safe districts were more likely to support it.
- Minority politicians were more likely to vote against it.
- Liberals tended to favour it.
- The leadership of both parties were in favour of it.
This jibes with what we remember observing at the time. TARP supporters tried to claim that they were doing the regrettable but “adult” thing to do, while they’re opponents were cast as either ideologues or slaves to popular winds.
However, one other factor doesn’t have much to do with responsibility or ideology. That’s the connection between taking lobbyist bucks from the banking industry and voting for the legislation. Here’s what Silver has to say:
The banking industry appears to have had its influence; members receiving a lot of contributions from the banking sector were significantly more likely to vote for the bill. Then again, we may be confusing cause and effect. Does Spencer Bachus tend to vote for bills that help the banking industry because he gets a lot of financial support from it? Or does he get a lot of support from the industry because he tends to vote in its favour? Or, might there be some characteristics of his Congressional District — such as high employment in the banking sector — that motivate both the contributions and Bachus’ votes? This is a tricky problem to solve. I did, however, look at the number of employees in each district in the financial sector, as that data is available from the Census Bureau, and it was not a very strong predictor of voting. So money/lobbying from the industry a factor in some of these votes — it was not simply a matter of Congressmen protecting local jobs in those industries.
Somehow we’re not surprised. Banks don’t just piss this money away for no reason. They spend it so that during crunch time their batters are ready to step up to the plate.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.