Paving the Road to “Too Big to Failâ€: Business Interests and the Politics of Financial Deregulation in the United States

Sandra Suárez and Robin Kolodny
Additional contact information
Sandra Suárez: Temple University, Philadelphia, PA, USA, suarez@temple.edu
Robin Kolodny: Temple University, Philadelphia, PA, USA, kolodny@temple.edu

Politics & Society, 2011, vol. 39, issue 1, 74-102

Abstract: The debate over the political power of business has witnessed a revival after the global financial crisis of 2007—2009. We begin by arguing that business political fragmentation or unity has important consequences for policy outcomes. The structure of the U.S. government is conducive to incremental policy changes, often in response to business pressures. In turn, these changes shape the political interests and alliances of business. We illustrate this dynamic through an analysis of the political processes leading to the enactment of the Financial Modernization Act (FMA) of 1999, which repealed Depression-era regulations and allowed commercial banks to enter the securities and insurance business and vice versa. The FMA condoned the emergence of largely unregulated diversified financial institutions, which proved “too big to fail†during the crisis. Several factors contributed to the FMA: political institutions, international competition, the ideological convergence of the Republican and Democratic parties, and the political interests of financial industry actors.

Keywords: business; power; political parties; financial industry; Glass-Steagall (search for similar items in EconPapers)
Date: 2011
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0032329210394999 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:polsoc:v:39:y:2011:i:1:p:74-102

DOI: 10.1177/0032329210394999

Access Statistics for this article

More articles in Politics & Society
Bibliographic data for series maintained by SAGE Publications ().