According to the International Monetary Fund, which seems to be having a quick break from bullying poor countries, banks and associated financial organisations which spend tons of money lobbying governments to tilt the playing field in their favour, aren't very good at their core business (i.e. making money). Even more shocking, they behave more recklessly with other peoples' money than organisations which don't spend their time trying to rig the market!
The study, entitled A Fistful of Dollars: Lobbying and the Financial Crisis, published by the IMF, reveals a stark correlation between lobbying by lenders and high loan-to-income loans.
The paper, written by a trio of high-profile IMF economists, established that firms who spend more on buying access to politicians are more likely to engage in risky securitisation of their loan books, have faster-growing mortgage loan portfolios as well as poorer share performance and larger loan defaults.
Highlighting 33 pieces of federal legislation that would have tamed predatory lending or introduced more responsible banking but were the target of intense lobbying, the IMF found that the efforts by banks to resist the legislation overwhelmingly succeeded.
Who'd have thought that a bunch of tricky short-term buck-chasers could behave in such a way?
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