Jonathan Hoenig: “Welcome to the Back-Scratching Economy”
Jonathan Hoenig: “Nearly a year ago we jpointed out the shameful politically-motivated largess being practiced under the guise of economic recovery. Now a new study from the University of Michigan confirms what we already knew: FINANCIAL INSTITUTIONS WITH POLITICAL TIES HAVE BEEN SIGNIFICANTLY MORE LIKELY TO GET BAILOUT MONEY THAN THOSE WITHOUT.”
“Professors Ran Duchin and Denis Sosvura demonstrated that banks with connections to members of Congressional finance committees or executives who served on Federal Reserve boards were significantly more likely to receive funds from the government’s Troubled Asset Relief Program, or TARP, than those without connectioins.”
” ‘Political connections play an important role ina firm’s access to capital,’ wrote Professor Sosyura, whose research indicates political ties actually shift capital to the weakest, most underperforming institutions.”