Civil Society and Financial Regulation: Consumer Finance Protection and Taxation after the Financial Crisis
Lisa Kastner
MPIfG Book
Abstract
Coalitions of consumer groups, NGOs, and trade unions have traditionally been considered politically weak compared to well-organized and resourceful financial sector groups which dominate or "capture" financial regulatory decisions. However, following the 2008 financial crisis, civil society groups have been seen to exert much more influence, with politicians successfully implementing financial reform in spite of industry opposition.
Drawing on literature from social movement research and regulatory politics, this book shows how diffuse interests were represented in financial regulatory overhauls in both the United States (US) and the European Union (EU). Four cases of reform in the post-crisis regulatory context are analyzed: the creation of a new Consumer Financial Protection Bureau in the US; the introduction of new consumer protection regulations through EU directives; the failure of attempts to introduce a financial transaction tax in the US; and the agreement of 11 EU member states to introduce such a tax. It shows how building coalitions with important elite allies outside and inside government helped traditionally weak interest groups transcend a lack of material resources to influence and shape regulatory policy.
By engaging with a less well-known side of the debate, it explains how business power was curbed and diverse interests translated into financial regulatory policy.
Contents
1 Introduction
PART I A Theory of Financial Regulatory Change
2 Towards a Causal Mechanism of Post-Crisis Regulatory Reform Dynamics
PART II The Cases
3 Winner-Take-All Politics and Diffuse Interest Groups: The US Consumer Regulator
4 Policy Compromise and Diffuse Interest in Financial Regulation: EU Consumer Finance Reforms
5 Diffuse Interests and the Limits of Lobbying: Case Study of the Financial Transaction Tax (FTT)
in the US
6 Diffuse Interests and the Limits of Capture: Case Study of the EU FTT
7 Conclusions
Author
Lisa Kastner
Reviews
"Who would have thought that the financial industry sometimes has to cave in to civil society groups? In her David-against-Goliath account, Kastner does not downplay the lobbying power of the financial sector, but establishes that finance has moved from a back-room expertise to normal politics. A must-read for anybody interested in the politics of financial regulation." (Cornelia Woll, Professor of Political Sciences, Sciences Po, France)
