Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-13T02:06:11.341Z Has data issue: false hasContentIssue false
  • English
  • Français

Congressional Committees as Reputation-building Mechanisms

Published online by Cambridge University Press:  20 January 2017

Randall S. Kroszner  and
Thomas S. Stratmann
Randall S. Kroszner*
Affiliation:
University of Chicago & George Mason University
Thomas S. Stratmann
Affiliation:
University of Chicago & George Mason University
*
The University of Chicago, Graduate School of Business, Chicago, IL, USA. E-mail: randy.kroszner@gsb.uchicago.edu
Get access Rights & Permissions [Opens in a new window]

Abstract

Interest groups cannot enforce contracts with legislators to work in their favor since fee-for-service agreements would be considered bribery. When such contracts are not available, a system of specialized, standing committees can provide a second-best way to maximize contributions, since such a system facilitates repeated interactions and reputational development between PACs and members of the relevant committees. Using data on PAC contributions by competing financial services interests to members of the House Banking Committee, we find evidence consistent with key implications of our model of committees as reputational-development devises. We then interpret important episodes in the evolution and development of the committee system during the twentieth century from the perspective of our theory. We focus on the revolt against House Speaker Cannon, which resulted in the birth of the modern committee system, and the post-Watergate reforms. We also consider broader implications of this approach for analyzing term limits, corruption, and party strength. JEL classifications: D72, D78, G28.

Type
Research Article
Information
Business and Politics , Volume 2 , Issue 1 , April 2000 , pp. 35 - 52
Copyright
Copyright © V.K. Aggarwal 2000 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abreu, Dilip. 1988. Towards a Theory of Discounted Repeated Games. Econometrica 56: 383–396.Google Scholar
Ansolabehere, Stephen and Snyder, James. 1999. Money and Institutional Power. Texas Law Review 77(June): 1673–1704.Google Scholar
Austin-Smith, David and Wright, John. 1992. Competitive Lobbying for a Legislator's Vote. Social Choice and Welfare 9(2): 229–257.Google Scholar
Austin-Smith, David and Wright, John. 1994. Counteractive Lobbying. American Journal of Political Science 38(3): 25–44.Google Scholar
Becker, Gary S. 1983. A Theory of Competition among Pressure Groups for Political Influence. Quarterly Journal of Economics 98(3): 371–400.Google Scholar
Coker, David and Mark Crain, W. 1994. Legislative Committees as Loyalty-generating Institutions. Public Choice 81(3–4): 195–221.Google Scholar
Congress and the Nation. Washington, DC: Congressional Quarterly, Incorporated, Volumes VI (1985), VII (1989), and VIII (1993).Google Scholar
Cooper, Joseph. 1970. The Origins of the Standing Committees and the Development of the Modern House. Houston, TX: Rice University Studies.Google Scholar
Cox, Gary W. and McCubbins, Mathew D. 1993. Legislative Leviathan: Party Government in the House. Berkeley, CA: University of California Press.Google Scholar
Crain, W. Mark, Shughart, William F. II and Tollison, Robert D. 1988. Legislative Majorities as Nonsalvageable Assets. Southern Economic Journal 55(2): 303–314.Google Scholar
Denzau, Arthur T. and Munger, Michael C. 1986. Legislators and Interest Groups: How Unorganized Interests Get Represented. American Political Science Review 80(1): 89–106.Google Scholar
Evans, William and Kessides, Ioannis. 1993. Localized Market Power in the US Airline Industry. Review of Economics and Statistics 75(1): 66–73.Google Scholar
Fiorina, Morris. 1977. Congress: Keystone of the Washington Establishment. New Haven, CT: Yale University Press.Google Scholar
Fudenberg, Drew and Maskin, Eric. 1986. The Folk Theorem in Repeated Games with Discounting or with Incomplete Information. Econometrica 54(3): 533–554.Google Scholar
Ghosh, Parikshit and Ray, Debraj. 1996. Cooperation in Community Interaction without Information Flows. Review of Economic Studies 63(2): 491–519.Google Scholar
Gilligan, Thomas and Krehbiel, Keith. 1989. Asymmetric Information and Legislative Rules with a Heterogeneous Committee. American Journal of Political Science 33(3): 459–490.Google Scholar
Greene, William H. 1997. Econometric Analysis, 3rd edition. Upper Saddle River, NJ: Prentice-Hall.Google Scholar
Grier, Kevin B. and Munger, Michael C. 1991. Committee Assignments, Constituent Preferences, and Campaign Contributions. Economic Inquiry 29(1): 24–43.Google Scholar
Hall, Richard. 1996. Participation in Congress. New Haven, CT: Yale University Press.Google Scholar
Hall, Richard and Wayman, Frank. 1990. Buying Time: Moneyed Interests and the Mobilization of Bias in Congressional Committees. American Political Science Review 84: 797–820.Google Scholar
Irwin, Douglas and Kroszner, Randall. 1999. Interests, Institutions, and Ideology in Securing Policy Change: The Republican Conversion to Trade Liberalization after Smoot-Hawley. Journal of Law and Economics 42(2): 643–673.Google Scholar
Kiewiet, Roderick and McCubbins, Mathew D. 1991. The Logic of Delegation: Congressional Parties and the Appropriations Process. Chicago: University of Chicago Press.Google Scholar
Koenker, R. and Bassett, G. 1978. Regression Quantiles. Econometrica 46(1): 107–112.Google Scholar
Krehbiel, Keith. 1991. Information and Legislative Organization. Ann Arbor, MI: University of Michigan Press.Google Scholar
Kroszner, Randall S. 1996. The Evolution of Universal Banking and Its Regulation in Twentieth Century America. In Universal Banking: Financial System Design Reconsidered, edited by Saunders, Anthony and Walter, Ingo, 70–99. New York: Irwin Professional Publishers.Google Scholar
Kroszner, Randall S. 1997. The Political Economy of Banking and Financial Regulation in the US. In The Banking and Financial Structure in the NAFTA Countries and Chile, edited by von Furstenberg, George M., 200–213. Boston, MA: Kluwer Academic Publishers.Google Scholar
Kroszner, Randall S. and Rajan, Raghuram G. 1994. Is the Glass-Steagall Act Justified? A Study of the US Experience with Universal Banking before 1933. American Economic Review 84(4): 810–832.Google Scholar
Kroszner, Randall S. and Rajan, Raghuram G. 1997. Organization Structure and Credibility: Evidence from Commercial Bank Securities Activities before the Glass-Steagall Act. Journal of Monetary Economics 39(3): 475–516.Google Scholar
Kroszner, Randall S. and Strahan, Philip. 1996. Regulatory Incentives and the Thrift Crisis: Dividends, Mutual-to-Stock Conversions, and Financial Distress. Journal of Finance 51(4): 1285–1320.Google Scholar
Kroszner, Randall S. and Strahan, Philip. 1999. What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions. Quarterly Journal of Economics 114(4): 1437–1467.Google Scholar
Kroszner, Randall S. and Strahan, Philip. 2000. Bankers on Boards: Monitoring, Conflicts of Interest, and Lender Liability, Journal of Financial Economics, forthcoming.CrossRefGoogle Scholar
Kroszner, Randall S. and Strahan, Philip. Forthcoming. Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms. In Prudential Supervision: What Works and What Doesn't, edited by Mishkin, Frederic. Chicago: University of Chicago Press and National Bureau of Economic Research.Google Scholar
Kroszner, Randall S. and Stratmann, Thomas. 1998. Interest Group Competition and the Organization of Congress: Theory and Evidence from Financial Services’ Political Action Committees. American Economic Review 88(5): 1163–1187.Google Scholar
Kroszner, Randall S. and Stratmann, Thomas. 1999. Does Political Ambiguity Pay? Corporate Campaign Contributions and the Rewards to Legislator Reputation. Working Paper 7475. Cambridge, MA: National Bureau of Economic Research.Google Scholar
Magelby, David B. and Nelson, Candice J. 1990. The Money Chase: Congressional Campaign Finance Reform. Washington, DC: Brookings Institution.Google Scholar
Makinson, Larry. 1992. Open Secrets: The Encyclopedia of Congressional Money and Politics. Washington, DC: Congressional Quarterly, InC. Google Scholar
McCarty, Nolan and Rothenberg, Lawrence. 1996. Commitment and the Campaign Contribution Contract. American Journal of Political Science 40(3): 872–904.Google Scholar
Olson, Mancur. 1992. The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven, CT: Yale University Press.Google Scholar
Polsby, Nelson. 1968. The Institutionalization of the US House of Representatives. American Political Science Review 62(1): 148–168.CrossRefGoogle Scholar
Poole, Keith, Romer, Thomas and Rosenthal, Howard. 1987. The Revealed Preferences of Political Action Committees. American Economic Review 77(2): 298–302 Google Scholar
Roeder, Edward. 1983. PACs Americana. Washington, DC: Sunshine Services Corporation.Google Scholar
Rohde, David. 1991. Parties and Leaders in the Postreform House. Chicago: University of Chicago Press.Google Scholar
Romer, Thomas and Snyder, James M. Jr. 1994. An Empirical Investigation of the Dynamics of PAC Contributions. American Journal of Political Science 38(4): 745–769.Google Scholar
Sabato, Larry J. 1984. PAC Power: Inside the World of Political Action Committees. New York: W. W. Norton & Company.Google Scholar
Shepsle, Kenneth. 1978. The Giant Jigsaw Puzzle: Democratic Committee Assignments in the Modern House. Chicago: University of Chicago Press.Google Scholar
Shepsle, Kenneth and Weingast, Barry. 1987. Institutional Foundations of Committee Power. American Political Science Review 81(1): 85–104.CrossRefGoogle Scholar
Shepsle, Kenneth and Weingast, Barry, eds. 1995. Positive Theories of Congressional Institutions. Ann Arbor, MI: University of Michigan Press.Google Scholar
Snyder, James M. Jr. 1990. Campaign Contributions as Investments: The US House of Representatives, 1980–1986. Journal of Political Economy 98(6): 1195–1227.Google Scholar
Snyder, James M. Jr. 1992. Long-term Investing in Politicians: or, Give Early, Give Often. Journal of Law and Economics 35(1): 15–43.Google Scholar
Stratmann, Thomas. 1992a. The Effects of Logrolling on Congressional Voting. American Economic Review 82(5): 1162–1176.Google Scholar
Stratmann, Thomas. 1992b. Are Contributions Rational? Untangling Strategies of Political Action Committees. Journal of Political Economy 100(3): 647–664.Google Scholar
Stratmann, Thomas. 1995a. Logrolling in the US Congress. Economic Inquiry 33(3): 441–456.Google Scholar
Stratmann, Thomas. 1995b. Campaign Contributions and Congressional Voting: Does the Timing of Contributions Matter? Review of Economics and Statistics 72(1): 127–136.Google Scholar
Stratmann, Thomas. 1996. How Reelection Constituencies Matter: Evidence from Political Action Committees’ Contributions and Congressional Voting. Journal of Law and Economics 39(2): 603–635.Google Scholar
Stratmann, Thomas. 1998. The Market for Congressional Votes: Is the Timing of Contributions Everything? Journal of Law and Economics 41(1): 85–114.Google Scholar
Weinberger, Marvin and Greevy, David. 1982. PAC Directory: A Complete Guide to Political Action Committees. Cambridge, MA: Ballinger.Google Scholar
Weingast, Barry R. and Marshall, William J. 1988. The Industrial Organization of Congress; or, Why Legislatures, like Firms, Are Not Organized as Markets. Journal of Political Economy 96(1): 132–163.Google Scholar
White, Halbert. 1980. A Heteroskedasticity-consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity. Econometrica 48(2): 817–838.Google Scholar
Wittman, Donald N. 1995. The Myth of Democratic Failure. Chicago: University of Chicago Press.Google Scholar