The Political Economy of Banking Bailouts in Europe and the United States

Cornelia Woll and Emiliano Grossman, Sciences Po, Paris

Despite vigorous debates about the optimal response to banking failures, few analysts have paid attention to the great diversity of bailout plans across countries. Why do some governments commit extraordinary amounts of public money while other chose not to intervene, and what determines the mix of policy options chosen? By analyzing the variety of financial bailout strategies in Europe and North America, the project takes issue with arguments on both sides of the "Wall Street vs. Main Street" dispute and shows that bailout politics are neither driven entirely by the extent of the banking crisis nor are they solely the result of bank lobbying for public support. Project duration: January 2010 to May 2011.

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