Chapter

Prelude: Regulation Undermined Before 2007

Ewald Engelen, Ismail Ertürk, Julie Froud, Sukhdev Johal, Adam Leaver, Michael Moran, Adriana Nilsson and Karel Williams

in After the Great Complacence

Published in print September 2011 | ISBN: 9780199589081
Published online January 2012 | e-ISBN: 9780191731150 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199589081.003.0006
Prelude: Regulation Undermined Before 2007

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In this chapter we focus first on national political and financial elites whose mystifying stories about the nature and contribution of finance were mutually reinforcing, though also open to challenge. Through the chapter we develop the argument that the regulatory failure to control financial innovation was rooted in two kinds of mystification originating in the modus operandi of political and financial elites: constitutional mystification about regulation, and a mystifying narrative about the social value of finance. The chapter starts from the general conditions that weakened traditional regulation in both the United Kingdom and the United States, before turning to consider first the UK case in detail (including analysis of the limited social contribution of finance), followed by the failure of supra national regulation.

Keywords: financial elites; political elites; mystification; regulatory failure; social contribution of finance; narratives

Chapter.  11537 words.  Illustrated.

Subjects: Financial Institutions and Services

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