The influence on Congress by the thrift industry

The investigation of the influential role of the thrift industry on Congress as demonstrated by voting behavior on regulatory policy changes in the eighties is the focus of this study. Specifically, we search for the degree to which the inadequately capitalized component of the thrift industry has ‘captured’ the House of Representatives. We examine the influence on Congress by the thrift industry using the votes by the House of Representatives associated with three different legislative acts (the Garn-St Germain Act, the Competitive Equality Banking Act and the Financial Institutions Reform, Recovery, and Enforcement Act) addressing the thrift crisis. Using a multi-chotomous voting model we identify traditional public choice variables that could influence the probability of voting for legislation. To capture the variation of the thrifts' interests, we consider a series of financial variables motivated by the thrift literature of failure prediction models. These variables allow us to investigate the influences from the health of the congressional district's thrifts, their asset composition characteristics, and their reliance on regulatory forbearance.