TY - JOUR AU - Mian,Atif AU - Sufi,Amir AU - Trebbi,Francesco TI - The Political Economy of the U.S. Mortgage Default Crisis JF - National Bureau of Economic Research Working Paper Series VL - No. 14468 PY - 2008 Y2 - November 2008 UR - http://www.nber.org/papers/w14468 L1 - http://www.nber.org/papers/w14468.pdf N1 - Author contact info: Atif R. Mian Princeton University Bendheim Center For Finance 26 Prospect Avenue Princeton, NJ 08540 E-Mail: atif@princeton.edu Amir Sufi University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-6148 Fax: 773/702-0458 E-Mail: amir.sufi@chicagobooth.edu Francesco Trebbi University of British Columbia 1873 East Mall Vancouver, BC, V6T1Z1 Canada Tel: 604.218.5900 Fax: 604.822.5915 E-Mail: ftrebbi@mail.ubc.ca AB - We examine the determinants of congressional voting behavior on two of the most significant pieces of federal legislation in U.S. economic history: the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Emergency Economic Stabilization Act of 2008. We find evidence that constituent interests and special interests influence voting patterns during the crisis. Representatives from districts experiencing an increase in mortgage default rates are significantly more likely to vote in favor of the AHRFPA. They are precise in responding only to mortgage related constituent defaults, and are significantly more sensitive to defaults of their own-party constituents. Increased campaign contributions from the financial services industry is associated with a higher likelihood of voting in favor of the EESA, a bill which transfers wealth from tax payers to the financial services industry. We also examine the trade-off between politician ideology and constituent and special interests, and find that conservative politicians are less responsive to constituent and special interest pressure. This latter finding suggests that politicians, through ideology, can commit against intervention even during severe crises. ER -