Problem With Banks

Lena Rethel, Timothy Sinclair

Banks of all sorts are troubled institutions. The cost of public bail-outs associated with the subprime crisis in the United States alone may be as high as US$2 trillion. What is the problem with banks? Why do they seem to be at the centre of economic and financial turmoil down through the ages? In this provocative and timely book, Sinclair and Rethel seek answers to these questions, arguing that banks suffer from perennial problems, and that developments in the financial markets and government in recent decades have simply exacerbated these issues.

The Problem With Banks examines banking activity in America, Asia and Europe, and how specific historical circumstances have transformed banks’ behaviour and attitude to risk. While many see government as a constraint on banks, Sinclair and Rethel argue that what governments do in terms of regulation shapes banks and their motivations, as can be seen in the shortcomings of current reform proposals. Instead, more far-reaching, alternative ways of regulating and shaping banks are needed.

Contents

Preface
1. Banks in Crisis Time and Time Again
2. Banking is a Confidence Game
3. Banks Transformed I: Disintermediation and Financial Innovation
4. Banks Transformed II: Self-Regulation and Risk-Taking
5. Problems with Reform Proposals
6. Conclusions: What is to be done about Banks?

About the Authors

Lena Rethel is Assistant Professor of International Political Economy at the University of Warwick. Her research focuses on financial system change in Asia, the emergence and challenges of Islamic finance and the relationship of finance, debt and development. Her research has been published in a range of academic journals. Lena has co-edited two collections on the political economy of the subprime crisis that have appeared in New Political Economy and the British Journal of Politics and International Relations and a special issue on global governance in crisis that will appear in Global Society in 2012.
 

Timothy J. Sinclair is Associate Professor of International Political Economy at the University of Warwick. In 2001/2002 he was a visiting scholar at Harvard University. His research is concerned with the politics of global finance and theories of global governance. The paperback edition of his book, The New Masters of Capital: American Bond Rating Agencies and the Politics of Creditworthiness, was published by Cornell University Press in 2008.