
Slumps that shaped modern finance (2014) - Danieru
http://www.economist.com/news/essays/21600451-finance-not-merely-prone-crises-it-shaped-them-five-historical-crises-show-how-aspects-today-s-fina
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thedudeabides5
"At one point he locked the entire New York banking community in his library
until a $25m bail-out fund had been agreed."

Feels like JPM is a bit underrated by history. Imagine a Fed Chair who's not a
government official and who's only authority comes from the combination of his
financial prowess and personal balance sheet.

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ggm
nicely illustrated, coherent story. I'd love to see the european banking
crisis, Iceland (for instance) and the UK de-multualisations on this. Or, the
Japan or South American breakdowns of the post-war world, and the timeline for
IMF and World Bank intervention (which, like the chicago school, has not
always been as beneficial as they like to believe)

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diesign
Could you point me to some resources to learn about the UK Demutualizations?

Did some googling and the only standout was a Needleman text from 1991. Is
this relevant to what you are talking about?

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ggm
I only skimmed, but these felt relevant. The Needleman one feels like an
intensely structural/process analytic paper, focussed on legalisms. It isn't
exploring the problem as such. I felt these went more to the polemic intent I
had saying the UK demutualization had consequences.

[https://kar.kent.ac.uk/64829/](https://kar.kent.ac.uk/64829/) _Abstract This
paper examines and compares the performance and operating behaviour of
demutualized building societies (DBS) over the period of 1987-2007 relative to
mutual building societies and major retail banks in the UK. We find
significant differences in their operating behaviour over this period and show
that the operating behaviour varies with the form of ownership. We also
investigate the potential causes of the failure of all DBS in the UK. Our
findings show significant changes in the funding and lending strategies of DBS
which expose them to higher risk. We also find a strained capital formation
and deteriorating capital base of DBS in the post-conversion period. Our
results suggest that changes in the business model, diminished capital base
and, in part, failing to get all the necessary funding from the wholesale
market at the time of the financial crisis of 2007-08 contributed to the
demise of a once a successful financial institution in the UK._

[https://www.thenews.coop/85589/sector/big-bang-
demutualisati...](https://www.thenews.coop/85589/sector/big-bang-
demutualisation-building-societies-failed/)

[https://www.researchgate.net/publication/314899851_From_Demu...](https://www.researchgate.net/publication/314899851_From_Demutualization_to_Meltdown_A_Tale_of_Two_Wannabe_Banks)
_Robin Klimecki and Hugh Willmott University of Cardiff Business School,
Cardiff, UK Abstract – This paper aims to examine the inﬂuence of
neoliberalist deregulation on the rash ofdemutualisations of the 1990s. It
explores the extent to which the demutualisation of two building societies –
Northern Rock and Bradford & Bingley – and their subsequent demise in the wake
of the credit crunch exemplify key features of the neoliberalist experiment,
with a particular focus on their post-mutualisation business models._

[https://www.orkestra.deusto.es/images/investigacion/publicac...](https://www.orkestra.deusto.es/images/investigacion/publicaciones/articulos/2009-09.pdf)
_‘Strategic Failure’ and the case of the UK’s former Building Societies:
lessons for the reform of governance in the UK Banking sector J. Robert
Branston, Philip R Tomlinson, James R. Wilson_

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patfla
The Economist writes up this history well and I learned a few things. But in
particular in the conclusion, the Economist does their usual Mr-Market-knows-
best, and Mr-Govt-makes-us-weak, shtick.

There are true believers of the left - and there are true believers of the
right.

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Danieru
I read the article and I am not seeing where you are getting that.

The article supports the claim that having government subsidies of the banks
risk causes banks to take greater risks This seems like a common idea. The
Economist is arguing that it is important to keep capitalists liable for their
investments. The Economist does not want the government to be paying for bad
bets of the private sector. They are arguing for higher capital requirements
and tougher regulation.

