Fragile by Design
The Political Origins of Banking Crises and Scarce Credit
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- $41.99
Publisher Description
Why stable banking systems are so rare
Why are banking systems unstable in so many countries—but not in others? The United States has had twelve systemic banking crises since 1840, while Canada has had none. The banking systems of Mexico and Brazil have not only been crisis prone but have provided miniscule amounts of credit to business enterprises and households.
Analyzing the political and banking history of the United Kingdom, the United States, Canada, Mexico, and Brazil through several centuries, Fragile by Design demonstrates that chronic banking crises and scarce credit are not accidents. Calomiris and Haber combine political history and economics to examine how coalitions of politicians, bankers, and other interest groups form, why they endure, and how they generate policies that determine who gets to be a banker, who has access to credit, and who pays for bank bailouts and rescues.
Fragile by Design is a revealing exploration of the ways that politics inevitably intrudes into bank regulation.
PUBLISHERS WEEKLY
Business economists Calomiris and Haber (professors at Columbia Business School and Stanford University, respectively) explain how imperfectly politics and commercial banks intersect, and the consequences for the rest of us. Focusing on chronic instability in credit policies, they undertake a detailed comparative historical survey of five nations England, the United States, Canada, Mexico, and Brazil. Instead of pointing the finger at " Wall Street fat cats'" or railing at political realities, they show how and why complex human interests inhibit achieving sound credit systems. Calomiris (U.S. Bank Deregulation in Historical Perspective) and Haber (The Politics of Property Rights) include a close look at the U.S. regulatory failure in the 2007 2009 subprime mortgage crisis. The goal of stable and abundant credit is elusive, the authors wisely conclude, since those who control policy fiercely guard their powers, the media rarely helps voters disentangle complex financial arguments, and elected politicians must cater to bankers, shareholders, depositors, debtors, and taxpayers. Their analysis suggests that autocracies do better with policy than democracies: Meiji-era Japan, Bismarck's Germany, Pinochet's Chile, and today's China, for example. This learned inquiry deserves ample attention from scholars, regulators, and bankers themselves.
