Not All Housing GSEs Are Alike: An Analysis of the Federal Home Loan Bank System and the Foreclosure Crisis

While the financial crisis of 2008 ultimately affected the range of U.S. financial institutions, it began with practices in home ownership finance. The Federal Home Loan Bank (FHLBank) System was the first instrumentality created by the U.S. government, in 1932, to sustain affordable home ownership finance. In this article, the authors ask what role, if any, the FHLBanks played in the subprime lending and securitization practices that precipitated the current crisis. The authors analyze publicly available FHLBank financial data in terms of a framework focused on the System's assets: advances; mortgage loans acquired from members; and investments, particularly in mortgage-backed-securities. They conclude that the FHLBanks did not contribute significantly to problematic practices. Nonetheless, they recommend consideration of three reforms to the FHLBanks to ensure a return to effective regulation and responsible, affordable home ownership finance.     

What Are the Federal Home Loan Banks Up To? Emerging Views of Purpose among Institutional Leadership

The Federal Home Loan Bank System has come under sharp criticism in recent years, and the question has been raised as to whether it still has a public purpose. In this article, we ask what leaders in the Federal Home Loan Banks view their institutions' purpose to be in light of legislative changes to their mandates in 1989 and 1999. Based on interviews with FHLB executive managers and board members, we identify three clearly distinguishable views of these institutions' mission: housing finance, support for the viability of community financial institutions, and support for and community development. We go on to identify some of the implications of these distinctive views for the behavior of the FHLBs and for their governance structures.     

Privatization and the Courts: How Judicial Structures Shaped German Privatization

This article examines how legal institutional structures shaped the process of East German privatization by the Treuhandanstalt. It argues that the courts, as an important venue for oversight and accountability, were central to achieving the rapid and narrowly defined privatization carried out by the agency. Moreover, the experience of privatization after 1989 suggests the courts played a far more important role in shaping economic policy than one would have expected from traditional scholarship on public agencies, the courts, or the German legal system.     

Understanding Mission Expansion in the Federal Home Loan Banks: A Return to Behavioral-Choice Theory

Congress established the Federal Home Loan Banks (FHLBs) in 1932 to pursue the public purpose of homeownership. Recently, three views of their mission have emerged; one is that their purpose is to help small banks to remain viable. Why did their mission expand in this direction? We argue that mission expansion is a process that is better understood in terms of behavioral choice than public choice. Change began when expert attention was directed to small banks in rural areas and officials innovated within the existing rules to address their needs. Recognizing the FHLBs' usefulness, community bankers sought a more fundamental change in their practice. Responding to the general interest in preserving small banks' viability, legislative entrepreneurs advanced permissive rule changes. These were implemented to different extents in individual FHLBs in response to local needs. The case illustrates the usefulness of the behavioral‐choice paradigm for understanding change in public agencies and suggests legitimacy for mission change and the value of maintaining publicly directed administrative capacity.     

National protest agenda and the dimensionality of party politics: Evidence from four East-Central European democracies

Contemporary democracies show considerable differences in the issue composition of their protest politics, which tends to remain relatively stable over time. In countries like Germany or the Czech Republic, the vast majority of protests have been mobilised around sociocultural issues, such as human rights, peace, nuclear power or the environment, and only a tiny portion of protest has focused on economic issues. At the opposite extreme, protest in France or Poland usually has a strongly economic character and voices demands relating to material redistribution and social policy. What lies behind the cross-country differences in national protest agendas? In this article, the national protest agenda depends on what issues mainstream political parties are contesting: the content and strength of the master-issue dimension. In reference to the literature on the multidimensional political space and niche political parties, one should expect that there is a substitutive effect; where the stronger a specific master-issue dimension is in party politics, the less salient that issue dimension is in protest politics. This substitutive effect results from the tendency of electoral politics to reduce political conflict to a single-dimension equilibrium, which decreases the importance of other issues and relegates the contest over secondary, niche issues to the realm of policy-seeking strategies, with protest being a common type of this political strategy. In party systems where single-dimension equilibrium does not exist and the master-issue dimension is weaker, the same dynamics result in a more convergent relationship between party and protest politics and a greater similarity between the protest- and party-system agendas. To investigate this theory, the national protest agendas in four countries are examined. The Czech Republic, Hungary, Poland and Slovakia show four combinations of two crucial factors that are not available in the old Western democracies: the content and the strength of the master-issue dimension. The study draws on an original dataset of protest events organised in the four countries between 1993 and 2010, and on qualitative and quantitative data on issue dimensions of party politics obtained from studies on party politics and expert surveys. The results show that in the Czech Republic, where the master-issue dimension has remained strongly economic, protest has been predominantly sociocultural. In Poland between 1993 and 2001 and Hungary between 1993 and 2006, the master-issue dimensions are strongly sociocultural, while protest is predominantly economic. There is no single-dimension equilibrium in party politics in Slovakia or in post-2001 Poland and mainstream parties compete on both economic and sociocultural issues. Consequently, the substitutive dynamics between party and protest politics is weaker and the issue agendas in party and protest arenas are here more alike.     

Why Governments Innovate: Adoption and Implementation of Open Source Software by Four European Cities

ABSTRACT

A growing number of governments will consider and even choose to migrate to an alternative operating system that uses Free/Open Source Software (FOSS). This research examines why governments choose to migrate and what factors affect implementation. Drawing on a comparative case study of four cities, I find that governments decide to migrate for a range of factors, but are driven more by democratic values such as independence and self-determination than by a desire to cut costs or save money. I also find that implementation is affected by a variety factors but in particular by information technology's place within a city's organizational structure.     

Explaining Germany’s Position on European Banking Union

Much has been written about European banking union and Germany’s role in shaping it. Missing, however, is a comprehensive explanation for Germany's contradictory positions on banking union: German policymakers gambled on a single supervisory mechanism, and a single resolution mechanism yet drew the line on European-wide deposit insurance. We explain Germany’s mixed positions on banking union by drawing on prospect theory and theories of policy salience.