Politics and the rescue of insolvent savings and loans before 1989

The results presented in this paper are consistent with those predicted by public choice economists who believe that regulatory agencies represent the interests of their controlling congressional committees. Membership on committees is not random; congressmen seek committee assignments where they can represent the interests of their constituency. Congressmen from states where financial institutions are significant will seek membership on their respective banking committees. Once on those committees, congressmen will seek to protect and promote their own constituency. In the case of the savings and loan industry, insolvent savings and loans received benefits from staying in operation. These savings and loans gained another chance to gamble for resurrection. Being shut-down or placed in a management consignment program did not give this option. The results presented in our paper indicate that participation in one of the rescue programs is not random. Savings and loans in states with political power (representation on the Senate banking committee) are less likely to be resolved.A previous version of this paper was presented at the Southern Economic Association Meetings, November 18–21 1990, New Orleans, Louisiana. The authors thank James R. Barth, Henry N. Butler, Gordon Tullock, Lawrence J. White, and an anonymous referee, for helpful comments. Financial support from the Summer Research Program of the College of Business, Boise State University, is gratefully acknowledged. We accept responsibility for any remaining errors.     

Privatization of Municipal Wastewater Treatment

Privatization of wastewater treatment facilities was encouraged by changes in the law and in the attitude of government officials during the early 1980s The idea was for localities to benefit from the efficiency gains expected when operations were transferred from municipal administration to a profit-making organization. However, significant differences between the ideal and reality often existed, particularly when contracts all but eliminated the profit motive.     

Public choice in a local government setting

From its beginnings, public choice has always had a substantial component devoted to federalism and local government decision-making. The DeVoe Moore Center at Florida State University has made the study of local government within a public choice framework a core component of its mission. The Center held a conference February 17?C19, 2011, on public choice in a local government setting. This special issue of Public Choice contains the papers presented at that conference.