Taming the City? Ideas, Structural Power and the Evolution of British Banking Policy Amidst the Great Financial Meltdown

Abstract

We are increasingly learning more about the contingencies and independent variables that shape the structural power of business and financial interests. This paper contributes to this research by analysing factors that led to weakening in the structural power of financial interests in the City of London in the aftermath of the 2007/2008 crisis. We focus on under-researched mediators of structural power dynamics, especially the context of action and the agency and ideas of state leaders. Prior to the crisis, closed regulatory policy and a prevailing discourse premised upon the notion of market efficiency, helped to reinforce the structural power of the UK banking and financial sector. After the crisis heightened politicisation, more assertive state leadership, and especially ideational revision, has increasingly challenged the power of the City. We illustrate this through an examination of the Independent Commission on Banking's proposals in relation to the ‘ring fencing’ of investment and retail banks.

Keywords:

• structural power
• banking
• institutionalism
• financial crisis

Acknowledgement

We are grateful for the comments of two anonymous referees.

Notes on contributors

Stephen Bell is Professor of Politics in the School of Politics and International Studies at the University of Queensland.

Andrew Hindmoor is Professor of Politics in the Department of Politics at the University of Sheffield.