Cenk Uygur, the Aggressive Progressive, June 13, 2011: IMF Economists Blame Lobbyists for Crash. Video and transcript.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

A scathing new report reveals just how effective American banks and their lobbyists were in watering down regulations that helped fuel our mortgage meltdown. Two IMF economists just wrote a new article saying, “In the period from 2000 and 2006, a bill that was unfavorable to the financial industry was three times less likely to become law than one promoting deregulation.” So, of course, there was a great drive for deregulation. Well, let’s find out who caused that drive and what it resulted in.

The economists of the IMF determined that, “There was a clear association between the money affected financial firms spent on lobbying and the way legislators voted on the key bills considered before the crisis.” Shocking! It turns out the more money spent on lobbying, the more laws you can buy.

The IMF researchers also concluded that if a lobbyist had worked for a legislator in the past, the legislator was very likely to vote in favor of less regulation. That’s why the lobbyists buy the top staffers on the hill after they leave their government jobs.

Now what was the result of all of this? The report found, “Lenders that lobbied heavily between 2000 and 2006 tended to engage in risky lending practices more often than other institutions over the same period and suffered worse outcomes during the crisis.”

So, how did this work? They lobbied for deregulation, they bought the staffers, they bought the politicians, they got the deregulation, and then they crashed. But don’t worry, they shovel that cost onto the taxpayers anyway.

Our system of government is broken. The way we finance elections is broken. They buy our politicians, they get the results that they want, and to everyone’s detriment. It even hurt their own firms, and it certainly hurt all the taxpayers. We’ve got to find a new way. This is not helping our Democracy.

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About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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