Hostname: page-component-cd9895bd7-mkpzs Total loading time: 0 Render date: 2024-12-25T02:35:21.807Z Has data issue: false hasContentIssue false

Bank Rescue Schemes in Continental Europe: The Power of Collective Inaction

Published online by Cambridge University Press:  22 May 2014

Abstract

Comparing bank rescue schemes in France and Germany during the banking crisis of 2008–9, this article argues that collective inaction is a little-studied aspect in the exercise of power in business–government relations. Contrary to studies that focus on lobbying, structural power or the influence of beliefs, the comparison highlights that governments depend on contributions from the financial industry during crisis management. In the negotiations to design bank support schemes, some countries, such as France, succeeded in engaging their financial sector collectively. Such public–private burden-sharing arrangements alleviate the public budget and increase mutual surveillance between banks during government support. In other countries, such as Germany, a collectively organized industry response failed, which forced the government to design an entirely public support scheme. The German government reacted to this perceived imbalance by imposing tighter banking regulation to avoid a repetition of the impotence it experienced in 2008.

Type
Articles
Copyright
Copyright © Government and Opposition Ltd 2014 

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.)

Footnotes

*

Cornelia Woll is Professor of Political Science at Science Po, Paris. Contact email: [email protected].

References

Admati, A.R. and Hellwig, M. (2013), The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It (Princeton: Princeton University Press).Google Scholar
Bachrach, P. and Baratz, M.S. (1962), ‘Two Faces of Power’, American Political Science Review, 56(4): 947952.Google Scholar
Bachrach, P. and Baratz, M.S. (1963), ‘Decisions and Nondecisions: An Analytical Framework’, American Political Science Review, 57(3): 632642.CrossRefGoogle Scholar
Banque de France (2010), ‘De la crise financière à la crise économique’, Documents et Débats 291-0003 (Paris: Banque de France), www.banque-france.fr/publications/ documents-economiques/documents-et-debats/documents-et-debats-n-3.html.Google Scholar
Barnett, M. and Duvall, R. (2005), ‘Power in International Politics’, International Organization, 59(1): 3975.Google Scholar
Bell, S. (2012), ‘The Power of Ideas: The Ideational Shaping of the Structural Power of Business’, International Studies Quarterly, 56(4): 661673.Google Scholar
Brost, M., Schieritz, M. and Storn, A. (2009), ‘Hypo Real Estate: Die Mutter Aller Pleiten’, Die Zeit, 8 September, www.zeit.de/2009/26/HRE.Google Scholar
Busch, A. (2009), Banking Regulation and Globalization (Oxford: Oxford University Press).Google Scholar
Cour des Comptes (2009), ‘Les Concours publics aux établissements de crédit: premiers constats, premières recommandations’, Public Report, www.ccomptes.fr/publications.Google Scholar
Cour des Comptes (2010), ‘Les concours publics aux établissements de crédit: Bilan et enseignement à tirer’, Public Report, www.ccomptes.fr/publications.Google Scholar
Deeg, R. (2005), ‘Change from Within: German and Italian Finance in the 1990s’, in W. Streeck and K. Thelen (eds), Beyond Continuity: Institutional Change in Advanced Political Economies (New York: Oxford University Press): 160202.Google Scholar
Deeg, R. (2010), ‘Industry and Finance in Germany Since Unification’, German Politics and Society, 28(2): 116129.Google Scholar
Deutsche Bundesbank (2008), ‘Cornerstones of the Financial Market Stabilization Act’, Monthly Report 60(11), www.bundesbank.de/download/volkswirtschaft/monatsberichte/2008/200811mb_en.pdf.Google Scholar
European Commission (2011), ‘Eurostat Supplementary Table for the Financial Crisis: Background Note’ (Brussels: Eurostat), http://epp.eurostat.ec.europa.eu/portal/ page/portal/government_finance_statistics/documents/Background%20note_fin%20crisis_Apr%202011_final.pdf.Google Scholar
François, P. and Lemercier, C. (2013), ‘Pulsations of French Capitalism’, unpublished manuscript (Paris: Sciences Po, CSO/CNRS).Google Scholar
Grossman, E. (2006), ‘Europeanization as an Interactive Process: German Public Banks Meet EU State Aid Policy’, Journal of Common Market Studies, 44(2): 325348.Google Scholar
Hardie, I. and Howarth, D. (2009), ‘Die Krise but Not La Crise? The Financial Crisis and the Transformation of German and French Banking Systems’, Journal of Common Market Studies, 47(5): 10171039.Google Scholar
Harvey, D. (2011), The Enigma of Capital: And the Crises of Capitalism, 2nd edn (Oxford: Oxford University Press).Google Scholar
Höpner, M. and Krempel, L. (2004), ‘The Politics of the German Company Network’, Competition and Change, 8(4): 339356.Google Scholar
Igan, D., Mishra, P. and Tressel, T. (2011), ‘A Fistful of Dollars: Lobbying and the Financial Crisis’, in D. Ac and M. Woodford (eds), NBER Macroeconomics Annual 2011, Vol. 26 (Chicago: University of Chicago Press), www.nber.org/chapters/c12416.ack.Google Scholar
International Monetary Fund (2009), ‘Germany: 2008 Article IV Consultation’, IMF Country Report 09/15, www.imf.org/external/pubs/ft/scr/2009/cr0915.pdf.Google Scholar
Jabko, N. and Massoc, E. (2012), ‘French Capitalism Under Stress: How Nicolas Sarkozy Rescued the Banks’, Review of International Political Economy, 19(4): 562585.Google Scholar
Johal, S., Moran, M. and Williams, K. (2014), ‘Power, Politics and City of London after the Great Financial Crash’, Government and Opposition, 49(3): 400425.Google Scholar
Johnson, S. and Kwak, J. (2010), 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (New York: Pantheon).Google Scholar
Krahnen, J.P. and Schmidt, R.H. (2004), The German Financial System (Oxford: Oxford University Press).Google Scholar
Krüger, H.-U., Willsch, K.-P., Hauer, N., Wissing, V., Troost, A. and Schick, G. (2009), ‘Beschlussempfehlung Und Bericht Des 2. Untersuchungsausschusses Nach Artikel 44 Des Grundgesetz’, 16/14000 (Berlin: Deutscher Bundestag).Google Scholar
Kwak, J. (2013), ‘Cultural Capture and the Financial Crisis’, in D. Carpenter and D.A. Moss (eds), Preventing Regulatory Capture: Special Interest Influence, and How to Limit It (Cambridge: Cambridge University Press): 7198.Google Scholar
Luechinger, S. and Moser, C. (2012), The Value of the Revolving Door: Political Appointees and the Stock Market, SSRN Scholarly Paper ID 2147674 (Rochester, NY: Social Science Research Network).Google Scholar
Lütz, S. (2000), ‘From Managed to Market Capitalism? German Finance in Transition’, German Politics, 9(2): 149170.Google Scholar
MacKenzie, D. (2006), An Engine, Not a Camera: How Financial Models Shape Markets (Cambridge, MA: MIT Press).Google Scholar
MacKenzie, D., Muniesa, F. and Siu, L. (eds) (2008), Do Economists Make Markets?: On the Performativity of Economics (Princeton: Princeton University Press).Google Scholar
Martens, J. and Brunsden, J. (2011), ‘Dexia to Set Up “Bad Bank” with Guarantees from France, Belgium’, Bloomberg BusinessWeek, 4 October, www.businessweek.com/news/2011-10-04/dexia-to-set-up-bad-bank-with-guarantees-from-france-belgium.html.Google Scholar
Moran, M. and Payne, A. (2014), ‘Introduction: Neglecting, Rediscovering and Thinking Again about Power in Finance’, Government and Opposition, 49(3): 331341.Google Scholar
Olson, M. (1965), The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, MA: Harvard University Press).Google Scholar
O’Sullivan, M. (2007), ‘Acting out Institutional Change: Understanding the Recent Transformation of the French Financial System’, Socio-Economic Review, 5(3): 389436.Google Scholar
Renick Mayer, L., Beckel, M. and Levinthal, D. (2009), ‘Crossing Wall Street’ (Washington, DC: Center for Responsive Politics), www.opensecrets.org/news/2009/11/crossing-wall-street-1.html.Google Scholar
Steinbrück, P. (2010), Unterm Strich (Frankfurt a.M.: Hoffmann und Campe).Google Scholar
Strange, S. (1997), Casino Capitalism (Manchester: Manchester University Press).Google Scholar
Woll, C. (2014), The Power of Collective Inaction: Bank Bailouts in Comparison (Ithaca, NY: Cornell University Press).Google Scholar