Read the two articles attached on this page and write a two page letter to the editor that examines the relationship and changing role between private business firms and the government. The paper should be based in part on the two articles are provided. You may also included a discussion of the current healthcare debate if you wish. Your submission should be in a Word Document format. last name ", " first name Extra Credit. Title the file with your Again, you will use the Submit Assignment button on the right of this page to attach your file. FOLLOW THE INSTRUCTIONS IN THIS PARAGRAPH AND ATTACH THE FILE TO YOUR SUBMISSION. The two articles are: 1. Government Behind the Wheel.pdfPreview the document 2. Analysis of Financial Services Bailout.pdfPreview the document SUBSCRIBE NOW and Get CRISIS AND LEVIATHAN FREE! 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Date Name Telephone No. Organization Title CVC Code Street Address City/State/Zip/Country Signature Email The Independent Institute, 100 Swan Way, Oakland, CA 94621 • 800-927-8733 • Fax: 510-568-6040 prOmO CODE IrA1402 Government behind the Wheel More a Matter of Politics Than of Economics F JIM F. COUCH, PHILIP A. BURTON, KEITH D. MALONE, AND DAVID L. BLACK Closed [car] dealerships across the country deserve a transparent review of their termination and the right to get back in business if they were terminated on faulty grounds. —Senator Richard Durbin (D–Ill.) (qtd. in “Congress Plans Remedy” 2009) My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government. —Barack Obama (White House Press Office 2009) Jim F. Couch is a professor of economics; Philip A. Burton is an assistant professor of quantitative methods; Keith D. Malone is an assistant professor of economics; and David L. Black is an assistant professor of economics. All are at the University of North Alabama. The Independent Review, v. 15, n. 4, Spring 2011, ISSN 1086–1653, Copyright © 2011, pp. 577–591. 577 578 F J I M F. C O U C H E T A L . T he business of America is business,” President Calvin Coolidge once famously opined, and no industry better represented American prowess than automobile manufacturing.1 But that prowess has slowly eroded to the point that more than half of the cars Americans buy are “foreign” (“America’s Other Auto Industry” 2008).2 Domestic manufacturers—the so-called big three—have lost market share and face perhaps insurmountable financial troubles. The big three’s problems have several main sources, among others: high labor costs (for every United Auto Worker member working at a car manufacturer, three collect generous retirement benefits [“America’s Other Auto Industry” 2008]); poor quality, whether perceived or real; inefficiency (in 1995, for example, a General Motors [GM] automobile required forty-six hours to build, whereas a Toyota required 29.4 [“America’s Other Auto Industry” 2008]); and relatively low resale value. Escalating fuel costs worked against the sale of trucks and sport utility vehicles—something domestic producers did well and had hung their hats on. The financial crisis further exacerbated the problems Chrysler and GM faced to the point that both faced certain bankruptcy as 2008 came to a close. Domestic firms went from being the very symbol of American manufacturing strength to financial ruin. Business has changed since Coolidge’s day as well, with government stepping in to bail out struggling firms as never before. President George W. Bush, encouraged by President-elect Barack Obama, provided funds for GM and Chrysler from the Troubled Assets Relief Program (TARP) at the end of his term—a fund authorized by Congress to bail out banks and financial institutions. Bush defended his action by saying: “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action” (qtd. in Isadore 2008).3 Bush was simply keeping the firms afloat so that his successor could find a more permanent solution for the moribund manufacturers. President Obama took responsibility for restoring the industry. In March 2009, he asserted: “Year after year, decade after decade, we’ve seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we’ve reached the end of that road! And we, as a nation, cannot afford to shirk responsibility any longer. Now is the time to confront our 1. The statement is from a speech by Coolidge called “The Press under a Free Government,” delivered to the American Society of Newspaper Editors in Washington, D.C., on January 17, 1925. Coolidge apparently actually stated: “After all, the chief business of the American people is business.” The entire speech indicates that he was not as materialistic as his detractors have asserted. See http://www.calvin-coolidge. org/html/the_business_of_america_is_bus.html. 2. International manufacturers employ more than one hundred thousand U.S. workers building Hondas, BMWs, Mercedes, Toyotas, Hyundais, and other foreign brands. 3. Owing in part to the timeliness of the issue and in part to the subject matter, we rely to a greater extent than is typical on information from the popular press. The reader should be aware that these accounts are not subject to the same scrutiny as refereed sources. THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 579 problems head-on and do what’s necessary to solve them” (White House Press Office 2009).4 The president formed an automobile task force cochaired by Treasury secretary Tim Geithner and National Economic Council director Larry Summers, and Chrysler and GM were instructed to submit restructuring plans to the group for approval. Task force members included “the secretaries of Transportation, Commerce, Labor, Energy, the director of the Office of Management and Budget, the administrator of the Environmental Protection Agency, the director of the White House Office of Energy and Climate Change and the chair of the Council of Economic Advisors” (Shepardson and Trowbridge 2009). Steven Rattner, an investment banker, was selected to head the team. Rattner acknowledged the complexity of the task and his team’s inexperience in regard to the automobile industry, confessing, “We’ve learned a lot about how car dealers work, and how companies get paid when they sell a car to a dealer, and why there are a certain number of dealers more than are optimal” (qtd. in King and Stoll 2009). The president seemed pleased with the automobile task force’s progress. In a radio interview with Michael Smerconish, Obama criticized Bush’s actions and praised his own efforts. “The only thing that we did was rather than just write GM and Chrysler a blank check, we said, ‘You know what, if you’re going to get any more taxpayer money, you’ve got to be accountable’” (“Obama Is Interviewed” 2009). The task force rejected Chrysler’s initial viability plan but later accepted its second plan. The company filed under Chapter 11 of the U.S. Bankruptcy Code and as a condition of the bankruptcy sought to close 789 of its 3,181 authorized dealerships. Dealerships received a list of all the firms slated for closure and a message that stated: “With regret, this letter is to inform you that on May 14, 2009, we are filing a motion in bankruptcy court rejecting the Sales and Service Agreement (s) between Chrysler Motors LLC and the dealerships listed above” (qtd. in Valdez-Dapena 2009). Chrysler officials noted that the decision to close dealerships—in particular which franchises would be terminated—was difficult but necessary. James E. Press, vice chairman of Chrysler, stated, “This has been the most difficult business decision I have ever personally had to take. But the decision had to be made. They [sic] were gut-wrenching, but absolutely necessary for Chrysler’s survival” (qtd. in Becker 4. One of the major philosophical debates on the federal government’s “acquisition” of domestic automobile manufacturers pertains to the fundamental role of government. Although most elected federal officials avoided this question during the weeks leading up to the decision to acquire these companies, the question looms large. The larger question remains as to whether the government can or should acquire the assets of a failing major company, but the subtext of the “takeover” was not foreseen—the federal government now has conflicting, dual roles as both a competitor and a referee. An appropriate analogy would be to an umpire of a baseball game who wears the emblem of the team he prefers to win. This dual role reduces the trust and transparency that free markets require. Under this new “market” arrangement, all federal government regulations are suspect. The recent congressional hearings about the mechanical problems various Toyota models have experienced indicate that a third-way blend of government and corporations establishing a cooperative relationship is ill suited for free markets. VOLUME 15, NUMBER 4, SPRING 2011 580 F J I M F. C O U C H E T A L . 2009). The exact criteria used to determine which Chrysler dealerships got the ax were not clear. Chrysler’s executive vice president for North American sales, Steven Landry, asserted that the process was a function of the numbers: “The decision, though difficult, was based on a data-driven matrix that assessed a number of key metrics” (qtd. in Valdez-Dapena 2009). Various observers suggested that dealership profitability, customer-satisfaction surveys, whether the full line of Chrysler products was offered to shoppers, and dealership saturation in a particular area contributed to the decision to close a dealership. Heritage Foundation researchers argued that reducing intrabrand competition should be a significant factor in the decision-making process: “A surplus of franchises means dealers for the same manufacturer end up competing among themselves, resulting in lower returns across the board” (Sherk and Gattuso 2009, 2). Nevertheless, many dealers, facing the loss of their franchise, complained bitterly that their firms were profitable and that “the criteria being used to determine which dealerships survive is [sic] not clear” (qtd. in Tapscott 2009). Others suggested that politics influenced the decision. This assertion gained plausibility when it transpired that all of the dealerships in the McLarty-Landers-Johnson chain escaped closure. Robert Johnson, one of the firm’s owners, is the founder of Black Entertainment Television and is a heavy contributor to the Democratic Party. “Mack” McLarty, another owner, was an aide to former president Bill Clinton. Accusations spread that dealerships owned by individuals with ties to the Republican Party were being targeted for closure. In addition, adding fuel to the fire, people whose chief concern was politics rather than economics provided assistance to the task force. “Senior aides advising the task force include . . . former Obama campaign aides who are already hard at work reviewing a number of issues related to the restructuring of General Motors Corp. and Chrysler LLC” (Shepardson and Trowbridge 2009). The Treasury Department responded with a statement claiming that the government had played no role in selecting the dealerships whose franchise agreement would be terminated. The “[d]epartment had no role in choosing which contracts would be dropped or in the number dropped” (qtd. in Valdez-Dapena 2009). Nevertheless, attorney Leonard Bellavia, who represents a number of closed dealerships and has deposed senior Chrysler officials, told Reuters, “It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers. It really wasn’t Chrysler’s decision. They [Chrysler officials] are under enormous pressure from the President’s automotive task force” (qtd. in Tapscott 2009).5 5. At least one Chrysler executive has changed his tune: “[A]s Chrysler continues to report dismal sales, industry experts and even a former executive question whether the company blundered by dropping so many dealers and giving them just over three weeks to wind down operations. Jim Press, who served as Chrysler’s president and vice chairman until last month, said in an interview that he personally fought the dealership closings. ‘I saw it fraught with terrible issues and short-term sales cost as well as dislocation of customers,’ Mr. Press said. ‘Dealers are [Chrysler’s] only customers, the reason we are in business. How do you eliminate your customer?’” (Maltby 2009). THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 581 Political Considerations The Heritage Foundation, intrigued by the notion that political contributions might have shaped the decision to terminate Chrysler dealerships, conducted a study titled Closing Car Dealerships: A Matter of Economics, Not Politics (Sherk and Gattuso 2009). The authors analyzed data provided in Chrysler’s Chapter 11 bankruptcy filings with the U.S. Bankruptcy Court for the Southern District of New York. These filings included the names of all dealerships—both those that were to remain open and those slated for closure—as well as each firm’s address and owner(s). The study’s authors compared the political contributions of the majority owner of each dealership to the list of closures to determine if “Republican-leaning dealers were treated more harshly than those that supported Democrats.” They concluded: “[C]laims that the method by which dealers were selected was biased appear to be unfounded, with no correlation between political contributions and terminations” (Sherk and Gattuso 2009, 5). A Matter of Politics, Not Economics Public-choice theory asserts that politicians are motivated by a desire for reelection and that this desire shapes which policies are pursued and how they are implemented. Thus, the public’s outcry that government actions seldom solve real problems is misguided because the policy goal is not to provide a solution, but instead to build a winning coalition for the next election. In addition, government agencies—Obama’s automobile task force certainly qualifies—are not immune to political influence. Both the executive branch and the legislative branch of government use the apparatus of government for reelection purposes. In short, politics trumps economics. A vast literature supports this assertion. Several scholars have found that politics played an important role in the allocation of New Deal appropriations during the Great Depression (Wright 1974; Anderson and Tollison 1991; Couch and Shughart 1998). Despite Roosevelt’s eloquent speeches about helping those in distress, economic need was virtually ignored when dollars were distributed across the nation. Instead, empirical evidence supports the claim that there was a reelection strategy to the allocation. Economist William Shughart adds, “One key conclusion of public choice is that changing the identities of the people who hold public office will not produce major changes in policy outcomes” (Shughart 2008). Thus, the results of a Mercatus Center analysis of the Obama administration’s distribution of stimulus funds should not be surprising. Examining fourth-quarter expenditures from the American Recovery and Reinvestment Act of 2009—Obama’s stimulus package totaling more than $800 billion in expenditures and, to a much lesser extent, tax cuts—Jerry Brito and Veronique de Rugy found “no correlation between economic indicators and stimulus funding. Preliminary results find no effect of unemployment, median income, or even VOLUME 15, NUMBER 4, SPRING 2011 582 F J I M F. C O U C H E T A L . mean income on stimulus funds allocation” (2009, 6). Instead, the authors determined that stimulus dollars flowed disproportionately to Democratic-controlled congressional districts. Like FDR, the current administration has put political considerations ahead of economic need. Bureaus and agencies succumb to political pressure as well. Jim Couch and associates (1999) found that the Internal Revenue Service (IRS) conducted fewer audits in states that had delivered more votes to Clinton. Marilyn Young and associates (2001) also found a political component to IRS enforcement activity. Thomas Garrett and Russell Sobel (2003) note that Federal Emergency Management Agency disaster expenditures have been guided at least in part by the current president’s reelection strategy. Enforcement by the Environmental Protection Agency (Couch, Williams, and Wells 2008) and by antitrust authorities (Faith, Leavens, and Tollison [1982] 1995) has likewise been found to be politically motivated. Even the allocation of troops during the Vietnam War was discovered to be influenced by politics: more troops from states with less political clout were deployed to more dangerous locations and in more risky activities (Goff and Tollison 1987). Empirical Evidence: Dealership Closure Dealerships provide both direct and indirect employment opportunities; advertising revenue for local media; and generous tax revenue for city, county, and state governments derived from the sale of big-ticket items. Moreover, they are frequently called on to meet community philanthropic needs. Closure of a dealership, whether justified or not, is obviously unpopular with residents in the surrounding area. A politician seeking reelection would have a strong incentive to see that his supporters are not subjected to the negative effects of a closure. Obama administration officials were quick to point out that they did not have a voice in the determination of which dealerships would be closed. They claimed that Chrysler officials made the call. Both the administration and Chrysler executives asserted that economics drove the calculation. An analysis of the data provides evidence as to whether the administration sought to shield its supporters from the difficulties associated with the closure of dealerships. Data Analysis We began by determining the percentage of dealerships in each state that were closed. The percentage varied widely from state to state, ranging from a high of 40 percent of total dealerships closed in North Dakota, Utah, and West Virginia to a low of only 10 percent of total dealerships closed in Vermont (Alaska actually had no dealerships closed). These data appear in table 1. THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 583 Table 1 Percentage of Dealerships Closed, by State Alabama Alaska Arizona Percentage of Dealerships Closed Percentage of Dealerships Closed Full Line 1, 2* Percentage of Dealerships Closed Full Line 3, 4* 31.6 70.0 17.9 0.0 0.0 0.0 14.7 10.0 16.7 Arkansas 22.9 100.0 15.6 California 26.0 39.2 15.5 Colorado 27.5 29.4 26.1 Connecticut 16.3 35.3 3.8 Delaware 30.0 60.0 0.0 Florida 34.3 63.6 10.9 Georgia 17.8 50.0 11.5 Hawaii 14.3 0.0 14.3 Idaho 13.6 50.0 5.6 Illinois 27.7 59.3 9.0 Indiana 22.5 56.0 9.4 Iowa 25.0 53.8 19.7 Kansas 27.5 75.0 18.6 Kentucky 14.5 50.0 10.2 Louisiana 39.5 50.0 38.5 Maine 20.0 100.0 0.0 Maryland 34.7 61.5 4.3 Massachusetts 25.5 39.1 12.5 Michigan 26.0 57.6 6.3 Minnesota 25.0 33.3 22.4 Mississippi 15.6 50.0 10.7 Missouri 30.5 69.6 15.3 Montana 16.7 100.0 6.3 Nebraska 23.5 100.0 16.1 Nevada 35.7 50.0 20.0 New Hampshire 25.0 66.7 7.1 New Jersey 35.8 49.1 7.7 New Mexico 13.6 40.0 5.9 New York 17.7 52.6 5.5 North Carolina 18.1 35.3 12.7 (continued) VOLUME 15, NUMBER 4, SPRING 2011 584 F J I M F. C O U C H E T A L . Table 1 (Continued) Percentage of Dealerships Closed Percentage of Dealerships Closed Full Line 1, 2* Percentage of Dealerships Closed Full Line 3, 4* North Dakota 40.0 85.7 15.4 Ohio 31.3 63.3 15.3 Oklahoma 21.3 42.9 17.5 Oregon 14.3 22.2 11.1 Pennsylvania 30.1 53.8 8.2 Rhode Island 33.3 100.0 0.0 South Carolina 23.9 40.0 16.1 South Dakota 29.2 55.6 13.3 Tennessee 25.5 66.7 17.4 Texas 24.9 52.6 13.6 Utah 40.0 100.0 28.6 Vermont 10.0 25.0 0.0 Virginia 37.7 61.3 18.4 Washington 31.1 54.5 8.7 West Virginia 40.0 62.5 25.0 Wisconsin 16.0 63.2 4.9 Wyoming 26.3 66.7 18.8 *The “full-line” variable refers to the number of lines of Chrysler products a dealership offers. A value of 1 indicates the dealership offers only a single line of Chrysler products; a value of 4 indicates that the dealership offers the complete line of Chrysler products (three plus trucks). As noted previously, various economic factors and dealership characteristics have been cited as possible reasons for closing certain Chrysler dealerships. We combined both individual dealership characteristics and political factors in our analysis to determine which of these variables played a role in the calculation of franchise termination.6 6. The selection of explanatory variables in the analysis was guided by specific factors that Chrysler officials mentioned and by political variables standard in the literature. Thus, we examine intrabrand competition, the number of products offered by each dealership, and a proxy for dealership profitability—namely, the unemployment rate. At first glance, interbrand competition might have contributed to the decision to close a Chrysler franchise. However, the literature suggests that competing dealerships cluster together. “Dealerships have become concentrated into a small number of large suburban clusters with the spacing between clusters influenced by territorial security concerns for dealers selling the same make of automobile. The strong clustering tendency of dealerships has been attributed to comparison shopping opportunities for consumers and advertising advantages to sellers” (Lord 1992, 283). The term auto mile has been used to describe a collection of competing automobile dealerships that cluster together to market their product better. Hence, empirical evidence suggests that firms seek out their competitors and locate in close proximity to them rather than avoid them. THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 585 We based our analysis on public-choice theory. Thus, rather than suggesting that political contributions by the owner of each closed dealership to the political party opposing the current administration were paramount in the closure decision, as the Heritage study does,7 we employed a more direct measure, reelection efforts, which is standard in public-choice literature when analyzing the influence of the executive branch. The percentage of the vote cast for Obama in each state served as a political variable in our investigation (for example, we entered the same Obama vote percentage for each dealership in Alabama). Electoral votes per capita at the state level and party of the congressperson in the U.S. House of Representatives in each dealership’s district are included as additional measures of political influence. We also factored individual dealership characteristics into our analysis. Chrysler officials noted that the decision to terminate a dealership franchise was based on a number of factors, but they specifically mentioned dealerships’ profitability and level of customer service. These variables unfortunately are proprietary in nature, so our investigation admittedly suffers from their exclusion. We made an effort to account for profitability by including unemployment as a variable. Thus, the unemployment rate functions as a proxy for profitability in the analysis. If profitability is indeed a pertinent issue, then dealerships located in economically depressed areas—those with high unemployment rates—were more likely to be closed. Additional dealership characteristics included in the study were the number of Chrysler products that each dealership offered for sale and dealership saturation in a particular area. It was expected that dealerships with more extensive offerings and larger customer bases were more likely to escape closure. Our first model examined the percentage of total dealerships (data from table 1) in each state that was closed, so we investigated data at the state level first. Next we focused the analysis on individual dealerships. We analyzed the data to determine which factors played a statistically significant role in the decision to terminate a dealership franchise. A more technical analysis of the data and a description of the statistical models appear in the appendix to this article. Both the state-level analysis and the individual-dealership analysis suggest that a relationship did exist between not offering a full line of Chrysler products and the likelihood of losing a franchise. Chrysler spokespersons indicated before the closures that this factor would be a determining one, and we found evidence that it was indeed considered in their calculation. We found little evidence, however, to support the notion that Chrysler officials sought to limit intrabrand competition. In fact, the results from the dealership-level analysis indicate that Chrysler franchises facing less competition in the county were more likely to be closed, whereas dealerships in more heavily saturated areas were more likely to remain open. 7. The Heritage study examines whether a dealership remained open or was closed and the dollar amount donated to candidates, but it does not control for other factors associated with the decision to terminate franchises. VOLUME 15, NUMBER 4, SPRING 2011 586 F J I M F. C O U C H E T A L . Based on the empirical analysis, we also found that the economic health of the area surrounding the dealership did not affect the decision to terminate a dealership. Our proxy for economic vitality in the county, the unemployment rate, was not significantly related to dealership closure. Thus, of all the factors that various officials offered to explain how dealerships to be closed were selected, only “offering the full line of Chrysler products” was valid. None of the other explanations is supported by the analysis. However, we did find evidence that politics played a role. After controlling for other factors thought to influence the decision to close, we found evidence that dealerships were more likely to remain open in states that offered political support for Obama.8 This result is consistent in both the state-level and the dealership-level analyses. The evidence therefore suggests that the Obama administration was concerned with more than Chrysler’s long-term viability—namely, it was concerned with protecting Obama’s supporters from the negative consequences of a dealership closure. Conclusion Our results strongly support the notion that the Obama administration—either directly through the automotive task force or indirectly by putting pressure on Chrysler executives—played a key role in the selection of which dealerships would be closed. Although some observers argue that the government can effectively regulate the private sector, our results suggest that the temptation to succumb to political considerations is strong and, indeed, cannot be avoided. All of the model specifications we estimated support a political motivation behind the selection of dealerships slated for closure.9 President Obama ran on a platform of change and promised a more open, efficient, and effective government. In the case of 8. A more innocuous explanation can account for the relationship between Obama and dealership closure. Suppose both Obama support in a state and dealership closures in a state are correlated with income. States with higher incomes may have given Obama greater political support and provided a more profitable environment for dealerships. Thus, the significance of the Obama variable may not indicate a political motivation but rather simply reveal that the Obama variable is a proxy for high income. We also tested for this possibility, and the evidence supporting the political hypothesis remains strong. Although state median income is positively and significantly related to state support for Obama, the percentage of dealerships closed in each state and median income are unrelated. The technical detail of the relationship among these variables is provided in the appendix. 9. Public choice assumes that decisions are influenced by the desire to build a strong reelection coalition. However, this behavior can manifest itself in several forms: politicians may choose to reward their loyal supporters or may instead attempt to influence swing voters. We entered the percentage of the vote for Obama in the model tests to see if supporters were favored. We also entered a second variable in the model to capture efforts to win swing voters. In order to test this hypothesis, of electoral  we calculated a measure  importance for each state. The variable was calculated as Ei ¼ EVi P  1  4 ðPi  0:5Þ2 , where EVi is the number of electoral votes per state and Pi is the percentage margin of victory for President Obama per state. Thus, a state in which the voting results were close would have greater importance in building a reelection strategy. We included this variable in one version of the model but found that it offers no explanatory power. Given the timing of the Chrysler reorganization—very early in Obama’s term—it seems reasonable that the administration would have chosen a “reward your supporters” strategy over a “win a swing state” strategy. THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 587 Chrysler dealership closures, however, this administration’s behavior displays politics as usual. Our results, unlike those of the Heritage Foundation’s study, support the notion that political considerations, not economics, influenced the decisions. Appendix Procedure As noted previously, we divided the political analysis into two parts: a study at the state level and an investigation at the individual-dealership level. First, we examined the state level, employing an ordinary least squares (OLS) regression. The percentage of total dealerships closed in each state served as the dependent variable in our empirical analysis. The data appear in table 1. Independent variables include the percentage of dealerships in each state that carry either the full line of Chrysler products or the full line of Chrysler products plus trucks. We derived information about the line of vehicles carried by each dealership from Chrysler’s filings with the Bankruptcy Court. The state unemployment rate in 2009 is included as an explanatory variable for dealership profitability. If maximizing sales per dealership was the decision makers’ goal, then it was expected that more dealerships would be closed in states with weaker economies. In the first OLS model, we included the total number of dealerships in the state divided by state population in millions. In the second specification, we entered total number of dealerships per ten thousand square miles. Both obviously measure dealership saturation, and the expectation was that more franchise agreements would a priori likely be voided in states with greater intrabrand competition. The court filings provided the location of each dealership. We included two political variables in the models. The first is the percentage of a state’s vote cast for Obama in the presidential election. The second is the number of electoral votes per capita in each state. OLS regression results are presented in table 2. Next, we conducted an examination of each individual dealership. Because the variable of interest in this case is whether a particular firm was allowed to remain open or forced to close, a logistic model is estimated. To determine the extent to which nonpolitical considerations influenced the closure decision, once again we included a number of independent variables suggested by Chrysler spokespersons. The number or “line” of Chrysler products that each dealership offered for sale served as one such independent variable. If carrying a more extensive line of Chrysler products was associated with remaining open, as suggested, then this variable’s regression coefficient was expected to be negative and statistically significant. To determine whether reducing intrabrand competition played a role in the decision to close, we calculated the ratio of county population to the number of dealerships in the county for each firm. A smaller ratio indicates fewer potential customers per dealership. Hence, the likelihood of closure should have increased as the ratio of potential customers per dealership declined. Finally, we included the county unemployment VOLUME 15, NUMBER 4, SPRING 2011 588 F J I M F. C O U C H E T A L . Table 2 OLS Regressions Variables Model 1 Model 2 Constant 76.55 (5.56*) 81.0 (6.2*) Obama Vote –0.298 (2.22**) –0.31 (2.34**) Unemployment Rate –0.72 (1.24) –0.85 (1.55) Full Line –0.39 (4.61*) –0.41 (4.41*) Electoral Votes –1.77 (1.28) –1.48 (1.19) Dealerships/Population 0.121 (0.57) Dealerships/Area R-squared –0.028 (0.38) 0.358 0.356 Note: T-statistics in parentheses. *Statistical significance at the 1 percent level of confidence. **Statistical significance at the 5 percent level of confidence. rate in the model. If economic considerations played a role in the decision to close a dealership, this variable’s regression coefficient would be expected to be positive and significant. High levels of unemployment should have translated into lower dealership profitability and thus greater likelihood of termination—at least according to Chrysler officials. Table 3 provides the results for the logistic model. Results The OLS models that examine the percentage of dealerships closed in each state both explain approximately 36 percent of the variance in the dependent variable. Neither the unemployment rate nor either of the measures of intrabrand competition has any explanatory power. However, as the percentage of total dealerships offering a more Table 3 Logit Analysis Parameter Estimate Pr > ChiSq Intercept 3.56 0.0001* Full Line –0.992 0.0001* Unemployment Population/Dealership 0.001 0.936 0.0000001 0.029** Representative –0.148 0.127 Obama Vote –3.12 0.0001* Note: “Representative” is equal to one if the congressperson representing the dealership’s district is a Democrat and zero otherwise. *Significant at the 1 percent level of confidence. **Significant at the 5 percent level of confidence. THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 589 complete line of Chrysler products in the state increased, the percentage of dealerships closed in the state decreased, and this result is statistically significant at the 1 percent level of confidence. Electoral votes per capita has the correct sign but lacks statistical significance. The results do indicate that a smaller percentage of dealerships was closed in states that offered greater political support for Obama. This result is significant at the 5 percent level of confidence. Both specifications indicate that political considerations influenced dealership franchise termination. In particular, the results indicate that rather than attempting to win new voters, Obama instead used his influence to reward his allies by protecting dealerships where his support was stronger. The logistic regression likewise supports the service of a political motivation in the decisions regarding which dealerships to close. The county unemployment rate offers no explanatory power in the model. Population per dealership is significant at the 5 percent level of confidence, but its sign is the opposite of what was expected: Chrysler dealerships with a larger customer base were terminated, whereas firms with a smaller base were allowed to remain open. However, the full-line variable is significantly related to closure and behaves as expected.10 Dealerships that did not offer as many Chrysler products were more likely to lose their franchise. Because we examine individual firms, the variable “Representative” is included. Representative measures the party of the congressperson in the U.S. House of Representatives in each dealership’s district. The variable is insignificant in the analysis. But the independent variable that measured support for Obama in his contest with John McCain is significant at the 1 percent level of confidence. As the percentage of the vote for Obama increased in a state, the probability that dealerships in that state would survive increased as well. As noted previously, support for Obama in the presidential contest is correlated with higher state average income. In other words, richer states offered more political support for Obama than did poorer states. Thus, the Obama variable may be serving as a proxy for income in our models, so that executives, in making the decision to close dealerships, simply terminated firms in lower-income areas. To examine this possibility, we estimated regressions that include state median income, full line of Chrysler products, and Obama. In all the specifications, the Obama and full-line variables behaved as before and are statistically significant. However, median income does not offer any explanatory power. In addition, we constructed a correlation matrix with median income, Obama vote, and the percentage of dealerships closed. Although the Obama vote and median income are highly correlated, median income and percentage of dealerships closed are not related. Therefore, our evidence of political influence remains strong. The regressions and the correlation matrix are included in table 4. 10. The full-line variable might represent higher income and more prosperous locations. The variable is not significantly correlated with income per capita or with the unemployment rate. VOLUME 15, NUMBER 4, SPRING 2011 590 F J I M F. C O U C H E T A L . Table 4 Correlations Percentage of Obama Vote Unemployment Rate Unemployment Rate 0.207 (0.149) Percentage of Dealerships Closed –0.056 (0.701) –0.011 (0.941) 0.481 (0.000) –0.151 (0.294) Median Income Percentage of Dealerships Closed 0.065 (0.655) Note: Pearson correlation values are in parenthesis. A number of regressions were run with income included as an explanatory variable. Median income was never statistically significant in any of the models, but both the full-line and Obama variables retained their statistical significance. The results from two specifications are: % Dealerships Closed = 54.1 - 0.283 %Full Line - 0.000181 Median Income % Dealerships Closed = 64.4 - 0.328 %Full Line - 0.252 %Obama - 0.000072 Median Income References America’s Other Auto Industry. 2008. Wall Street Journal, Review and Outlook, December 1. Anderson, Gary M., and Robert D. Tollison. 1991. Congressional Influence and Pattern of New Deal Spending, 1933–1939. Journal of Law and Economics 34 (April): 161–75. Becker, Bernie. 2009. GM and Chrysler Defend Dealer Closings to Senate Panel. New York Times, June 3. Available at: http://www.nytimes.com. Brito, Jerry, and Veronique de Rugy. 2009. Stimulus Facts. Working Paper no. 09-46. Washington, D.C.: Mercatus Center, George Mason University, December. Congress Plans Remedy in GM, Chrysler Dealer Dispute. 2009. Reuters, December 8. Couch, Jim F., Keith Atkinson, Tommie Singleton, and Peter Williams. 1999. Political Influence and the Internal Revenue Service. Cato Journal 19 (Fall): 313–22. Couch, Jim F., and William F. Shughart. 1998. The Political Economy of the New Deal. Cheltenham, U.K.: Edward Elgar. Couch, Jim F., Robert J. Williams, and William H. Wells. 2008. Environmental Protection Agency Enforcement Patterns: A Case of Political Pork Barrel? In Political Economy, Linguistics, and Culture: Crossing Bridges, edited by Jürgen G. Backhaus, 233–39. European Heritage in Economics and the Social Sciences, vol. 5. Berlin: Springer. Faith, R. L., D. R. Leavens, and R. D. Tollison. [1982] 1995. Antitrust Pork Barrel. In The Causes and Consequences of Antitrust, edited by William F. Shughart, 201–12. Chicago: University of Chicago Press. Garrett, Thomas A., and Russell S. Sobel. 2003. The Political Economy of FEMA Disaster Payments. Economic Inquiry 41, no. 3 (July): 496–509. Goff, Brian, and Robert Tollison. 1987. The Allocation of Death in the Vietnam War. Southern Economic Journal 54 (October): 316–21. THE INDEPENDENT REVIEW GOVERNMENT BEHIND THE WHEEL F 591 Isadore, Chris. 2008. Bush Announces Auto Rescue. Money.cnn.com, December 19. King, Neil, and John D. Stoll. 2009. Auto Task Force Set to Back More Loans—with Strings. Wall Street Journal, March 26. Lord, Dennis J. 1992. Locational Dynamics of Automobile Dealerships and Explanations for Spatial Clustering. International Review of Retail, Distribution, and Consumer Research 2, no. 3 (July): 283–308. Maltby, Emily. 2009. Chrysler Dealerships Fight Closings: New Law May Help Reinstate Stores; Some Experts Call Closure Process a Mistake. Wall Street Journal, December 31. Obama Is Interviewed by Michael Smerconish. 2009. Washington Post, August 20. Available at: http://www.Washingtonpost.com. Shepardson, David, and Gordon Trowbridge. 2009. Auto Task Force Taking Shape. Detroit News.com, Washington Bureau, February 21. Sherk, James, and James Gattuso. 2009. Closing Car Dealerships: A Matter of Economics, Not Politics. Backgrounder no. 2296. Washington, D.C.: Heritage Foundation, July 8. Shughart, William F., II. 2008. Public Choice. In The Concise Encyclopedia of Economics, edited by David R. Henderson, 427–30. Indianapolis: Liberty Fund. Tapscott, Mark. 2009. Furor Grows over Partisan Car Dealership Closings. Washington Examiner, May 27. Valdez-Dapena, Peter. 2009. Chrysler Closing 789 Dealerships. CNNMoney.com, May 15. White House Press Office. 2009. Remarks by the President on the American Automobile Industry. March 30. Available at: http://www.whitehouse.gov. Wright, Gavin. 1974. The Political Economy of New Deal Spending: An Econometric Analysis. Review of Economics and Statistics 56 (February): 30–38. Young, Marilyn, Michael Reksulak, and William F. Shughart. 2001. The Political Economy of the IRS. Economics and Politics 13, no. 2: 201–20. VOLUME 15, NUMBER 4, SPRING 2011 An Analysis of the Financial Services Bailout Vote Jim F. Couch, Mark D. Foster, Keith Malone, and David L. Black Washington’s remedy to the financial problems that began in 2008 was the Troubled Asset Relief Program (TARP)—the socalled bailout of the banking system. Whatever its merits, it was, for the most part, unpopular with the American public. Lawmakers, fearful that the economy might actually collapse without some action, were likewise fearful that action—in the form of a payout to the Wall Street financiers—would prove to be harmful to them at the polls. Thus, politicians sought to assure the public that their vote on the measure would reflect Main Street virtues, not Wall Street greed. Members of Congress, addressing the public’s misgivings about the bailout, asserted that they were wrestling with difficult issues such as fairness and equity, banking regulation, executive pay, job losses, moral hazard, 401(k) values, and the proper role of the state. Furthermore, they argued, these complex issues were difficult for the public to understand, and legislators, vigilant in carrying out their duty, were weighing the pros and the cons in order to cast a vote that was in the best interest of the nation. Cato Journal, Vol. 31, No. 1 (Winter 2011). Copyright © Cato Institute. All rights reserved. Jim F. Couch is Professor of Economics at the University of North Alabama; Mark D. Foster is Associate Professor of Finance at the University of North Alabama; Keith Malone is Associate Professor of Economics at the University of North Alabama; and David L. Black is Instructor of Economics at the University of North Alabama. 119 Cato Journal But it turns out that when one moves beyond the speeches, the underlying motivation behind most votes cast was hardly complex and actually quite simple. In this article, we construct a model to analyze the bailout vote of each legislator. A simple reelection model of legislator behavior explains a majority of the votes taken either for or against the measure from politician to politician. Wall Street vs. Main Street Those with an appreciation of the merits of limited government enjoy reflecting on the past. They recall those halcyon days when a balanced budget amendment—a rather quant notion by today’s standards—failed by only a single vote in the Senate. How things have changed. The economic zeitgeist is government takeovers, bailouts, and stimulus plans along with escalating debt and deficits. Indeed, commenting on the federal budget for FY 2009, Stanford University economist Michael Boskin (2009) put government borrowing in perspective: “The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents—from George Washington to George W. Bush—combined.” Indeed, the FY 2009 budget deficit was larger than the entire economy of India and almost as much as the Canadian economy. “Forecasts of more red ink mean the federal government is heading toward spending 15 percent of its money by 2019 just to pay interest on the debt, up from 5 percent this fiscal year” (Crutsinger 2009). It could be argued, however, that the staggering explosion of federal debt under the Obama administration was precipitated by unprecedented spending during the Bush administration. The Emergency Economic Stabilization Act of 2008, otherwise known as TARP, whatever its merits in terms of rescuing the economy, represented a dramatic departure from normal government operations. As President Bush all but acknowledged in his November 12, 2009, address at Southern Methodist University, TARP opened the floodgates of government intrusion into the private sector: I went against my free-market instincts and approved a temporary government intervention to unfreeze credit and prevent a global financial catastrophe. . . . As the world recovers, we will face a temptation to replace the risk-and-reward model of 120 Financial Services Bailout Vote the private sector with the blunt instruments of government spending and control. History shows that the greater threat to prosperity is not too little government involvement, but too much [Bush 2009]. The $700 billion dollar stabilization package was designed to provide liquidity to the nation’s banking and financial firms that faced, at best, uncertain futures. Assisting the financial industry through taxpayer loans and grants proved to be unpopular with the American public. Jonathan Weisman, writing in the Washington Post, acknowledged the unusual nature of the vote: “Rarely has a congressional vote held such high drama and produced such immediate repercussions, directly from the House floor to the trading floor” (Weisman 2008). Congress, fearful that the economy might actually collapse without the bailout but aware that rewarding Wall Street would agitate voters, did what they do best—they made speeches appealing to populism. Most castigated Wall Street greed, differentiating between Main Street virtue and Wall Street avarice. Others took aim at Treasury Secretary Henry Paulson. Representative Brad Sherman (D-CA) provides a useful example: We live in an era of great concentration of power in the Executive Branch and great concentration of wealth on Wall Street. Today we are asked to approve the greatest power grab any executive has ever asked for and the greatest transfer of wealth Wall Street could imagine. . . . We can make a bill that reflects American values and not Wall Street values [Sherman 2008]. Senator Sherrod Brown (D-OH) acknowledged the public’s displeasure with TARP: “I don’t think a single call to my office on this proposal has been positive. I don’t think I have gotten one yet of the literally thousands of emails and calls we’re getting” (Brown 2008). Representative Peter DeFazio (D-OR) criticized Wall Street but, in addition, attacked Secretary Paulson directly: He wants to take care of Wall Street’s illiquid assets, as what he nicely labels them. Nice charitable pundits have said Cash for Trash. Wall Street could then return to business as usual. That is Mr. Paulson’s plan. He is of, by, for and about Wall 121 Cato Journal Street, former head of Goldman Sachs. We should not be rolled by a Wall Street exec who is masquerading as Secretary of the Treasury [DeFazio 2008]. Senator Chris Dodd (D-CT), chairman of the Senate Banking Committee, echoed the Wall Street versus Main Street theme and pointed out who was likely to benefit from the expenditures: It would do nothing, in my view, to help a single family save a home, at least not upfront. It would do nothing to stop even a single CEO from dumping billions of dollars of toxic assets on the backs of American taxpayers, while at the same time do nothing to stop the very authors of this calamity to walk away with bonuses and golden parachutes worth millions of dollars [Dodd 2008]. Richard Shelby (R-AL) agreed with his Democratic colleagues, asserting: The Treasury’s plan has little for those outside of the financial industry. It is aimed at rescuing the same financial institutions that created this crisis, with the sloppy underwriting and reckless disregard for the risks they were creating, taking or passing on to others. Wall Street bet that the government would rescue them if they got into trouble. It appears that bet may be the one that pays off [Shelby 2008]. Lawmakers unequivocally pronounced that Wall Street elites would not win the day. It was made clear that Main Street had the ear of the Congress. Taxpayers would not bear the brunt of the miscalculations of the bankers, brokers, and financiers. Government Allocation of TARP Funds A few politicians were uncomfortable with the expanded role that government was playing in the market. Representative William Thornberry (R-TX) made this observation and pointed out that he had wrestled with the issue: Deciding how to vote on this issue has been among the most difficult votes I have cast in Congress. The economic condi122 Financial Services Bailout Vote tion and well-being of every American will be affected. I continue to be uncomfortable with the degree of government intrusion into our economy that this bill would authorize. I also continue to be concerned about the economic consequences to all Americans if some sort of action is not taken. It is balancing those two positions that make this vote extremely difficult [Thornberry 2008]. While we are admittedly getting a little ahead of ourselves, Representative Thornberry’s fears proved to be valid. The bailout vote did indeed pass, but the funds were not directed in a manner consistent with an effort to increase liquidity—and thereby, hopefully, bring about recovery. Instead, funds were directed to financial institutions with political clout. Healthy banks that could make loans and supply liquidity were supposed to receive TARP funds in order to head off financial calamity. OneUnited Bank certainly did not meet that requirement. The bank was in deep trouble. However, the bank was tied to two powerful legislators: Congressman Barney Frank (D-MA) and Congresswoman Maxine Waters (D-CA). Both Frank and Waters served on the House Financial Services Committee, with Frank serving as chairman and Waters as the third-highest Democrat in seniority. Until recently, Waters’s husband, Sidney Williams, was a director of the bank. Representative Waters at one time had investments in the bank and her husband also owned stock in the firm. In addition, bank executives donated to Waters’s political campaigns. She acknowledged calling the Treasury Department on OneUnited’s behalf. The bank eventually received $12 million in TARP funds. The money made its way to the bank through a special provision written into the bailout legislation. Wall Street Journal reporter Susan Schmidt explained, “A provision designed to aid OneUnited was written into the federal bailout legislation by Mr. Frank, who is chairman of the financial services panel. Mr. Frank said he inserted the provision to help the only African-American owned bank in his home state” (Schmidt 2009). Financial regulators were not impressed with many of the bank’s practices and the bank was ordered to name a new independent board. In addition, “the bank was ordered to stop paying for a Porsche used by one of its executives and its chairman’s $6.4 million beachfront home in Pacific Palisades” (Schmidt 2009). 123 Cato Journal Empirical evidence also shows a systematic political component to the distribution of TARP funds. Duchin and Sosyura (2009) examined the Capital Purchase Program, the largest TARP initiative in terms of the amount of expended capital. They measured political influence by examining the number of seats held by bank executives on the board of directors at Federal Reserve banks or branches, whether the bank’s headquarters was located in the district of a U.S. House member serving on a key congressional committee or subcommittee dealing with the financial service sector, the bank’s lobbying expenditures, and the bank’s campaign contributions to congressional candidates. Controlling for nonpolitical bank characteristics thought to influence the distribution of TARP funds, Duchin and Sosyura found that employing a bank executive that also serves at a Federal Reserve bank was associated with a 31 percent increase in the likelihood of receiving TARP funds. Having the bank’s headquarters located in the district of a U.S. Representative serving on a key financial service committee improved the chances of TARP funding by 26 percent. In addition, TARP funds flowed to those institutions that spent large sums of money lobbying and made significant contributions to politicians. Duchin and Sosyurn also found that political influence was strongest for poorly performing banks. Thus, political ties shifted funds to weaker institutions, a result at odds with the original stated purpose of TARP. The public, like Representative Thornberry, should be uncomfortable with the expanded role of the state. Instead of allocating funds in an effort to bring about economic recovery, legislators distributed dollars to politically connected banks. Our focus is on the original bailout vote of each legislator. We seek to determine to what extent political considerations drove the decision by legislators to support or reject TARP. Political Evidence Lawmakers made it clear that they faced a complex bill that grappled with extremely difficult issues. They assured the public that much time and effort had gone into assessing the merits of the proposed legislation. Issues such as fairness and equity, banking regulation, executive pay, and job losses all entered into their calculation. In addition, moral hazard, 401(k) values, and the proper 124 Financial Services Bailout Vote role of the state made the vote difficult at best. But it turns out that when one moves beyond the speeches, the underlying motivation behind most votes cast was hardly complex and actually quite simple. An examination of the bailout vote reveals that almost threefourths of the variation in the vote from politician to politician is explained by only four variables in the House of Representatives and only five variables in the Senate. The model investigating the House vote included the following independent variables: party affiliation, tenure, membership on the Financial Services Committee, and recent contributions to each politician from the financial-services sector. In the Senate model the same variables were included with the exception that the House Committee is replaced with a Senate Committee—membership on the Banking and Urban Affairs Committee. Also, a new variable is added—the number of years until each senator faces the voters in the next election. The dependent variable in the model is the vote—a yea or a nay—and thus, a Logit model is estimated. The first bill was defeated in the House with 228 members voting against the measure and 205 voting in favor.1 Democrats offered the most support with 140 voting in favor and 95 voting against the legislation. Only 65 Republicans supported the bill while 133 opposed. In the Senate, the measure passed with 74 members favoring the bill and 25 against. Campaign contributions to politicians from the financial service industry covering the years from 2003 through 2008 is used in the analysis. The industry includes security brokers and investment companies; commercial banks and bank holding companies; credit unions; finance, insurance, and real estate businesses; private equity and investment firms; banks and lending institutions; credit agencies and finance companies; stock exchanges; commodity brokers/dealers; venture capital funds; securities, commodities, and investment firms; and hedge funds. Both the vote and the amount of contributions to each member of Congress came from opensecrets.org and maplight.org. Party affiliation (1=Democrat; 0 other1 In the end, of course, the bill ultimately passed after it was altered (made better, according to lawmakers). Some of the alterations: NASCAR racetrack builders received over $100 million, Movie and television producers that made films in America were to receive $478 million over the next 10 years, a 39 cent excise tax on toy wooden arrows was repealed and rum producers in Puerto Rico and the Virgin Islands were to receive $192 million (Kang 2008). 125 Cato Journal wise), tenure (number of years in Congress), membership on key financial committees (1=member; 0 otherwise), and the number of years until the next election in the Senate are from the Maplight. org website. Tables 1 and 2 present the results for the House and Senate bailout vote analysis. Table 1 reveals that party affiliation, tenure, and contributions from the financial services sector are all significant at the 1 percent level. Specifically, the House model indicates that if members are Democrats, served for a longer period of time, or received contributions from the financial service sector, they were more likely to vote for the bill. Committee assignments are insignificant in the model. An investigation of the Senate bailout vote analysis in Table 2 yields results that are similar to the House of Representatives but not identical. Again, we find that the committee assignments included in the model did not offer any explanatory power. Likewise, party affiliation and years until the next election are not significantly related to the vote. Senators with greater years of service were more likely to support the measure (at the 10 percent level of statistical significance). Contributions were associated with a vote in favor of the bailout package and this variable was significant at the 1 percent level. TABLE 1 House Bailout Vote Analysis Variables Constant Estimate Significance –1.89 0.0001* Party 1.36 0.0001* Tenure 0.05 0.0002* Committee Contributions Percent Concordant –0.43 0.000005 0.204 0.0001* 72.2 Notes: * indicates significance at the 1 percent level. Dependent Variable: 1 if vote in favor of bailout bill, 0 otherwise. 126 Financial Services Bailout Vote TABLE 2 Senate Bailout Vote Analysis Variables Estimate Constant –1.26 0.135 Party 0.62 0.265 Tenure 0.057 0.077** Years until Election 0.154 0.373 –0.437 0.481 Committee Contributions Percent Concordant 0.000001 Significance 0.0174* 74.7 Notes: * indicates significance at the 1 percent level; ** indicates significance at the 10 percent level. Dependent Variable: 1 if vote in favor of bailout bill; 0 otherwise. Conclusion In the end, as the results make clear, the vote had very little to do with representing those on Main Street. Instead, politicians were guided by political considerations. In the House of Representatives, the longer politicians had served (safe seat), the more likely they were to vote in favor of the bill. Also, Democrats in the House were more likely to support the measure. In the Senate, party did not play a role but tenure was significantly and positively related to a yes vote. The most interesting factor in the model is the level of campaign contributions from the financial service sector. With the public paying unprecedented attention to the decision, those politicians that had received greater contributions from the financial service industry were the same politicians more likely to vote for the wealth transfer. Wall Street, like other special interest groups in America, continues to exert an inordinate amount of influence on Congress— and Main Street, as usual, picks up the tab. References Boskin, M. (2009) “Obama’s Radicalism Is Killing the Dow.” Wall Street Journal (6 March): A15. 127 Cato Journal Brown, S. 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(2008) “Rescue Sweetened with Tax Incentives: $107 Billion in Breaks Includes Help for NASCAR, Rum Makers.” Washington Post (4 October): D1. Schmidt, S. (2009) “Waters Helped Bank Whose Stock She Once Owned: California Democrat Has Championed MinorityOwned OneUnited on Capitol Hill and Criticized Its Government Regulators.” Wall Street Journal (12 March): C1. Shelby, R. (2008) “Bush Administration Faces Congressional Skeptics on $700B Wall St. Bailout.” Democracy Now (24 September). Available at www.democracynow.org/2008/9/24/bush_admin_ faces_congressional_skeptics_on. Sherman, B. (2008) House of Representatives (22 September). Available at: www.govtrack.us/congress/record.xpd?id=110h20080922-6. Thornberry, W. (2008) House of Representatives (3 October). Available at www.govtrack.us/congress/record.xpd?id=110h20081003-15#sMonofilemx003Ammx002Fmmx002Fmmx002 Fmhomemx002Fmgovtrackmx002Fmdatamx002Fmusmx 002Fm110mx002Fmcrmx002Fmh20081003-15.xmlElementm 578m0m0m. Weisman, J. (2008) “House Rejects Financial Rescue, Sending Stocks Plummeting.” Washington Post (30 September): A01. 128
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