The Politics of Banking: The Strange Case of Competition and Credit Control PDF
Preview The Politics of Banking: The Strange Case of Competition and Credit Control
THE POLITICS OF BANKING STUDIES IN POLICY- MAKING General Editor: Anthony King, Professor of Government, University of Essex Most books on British politics are concerned with political institutions with the cabinet, Parliament, the political parties and so on. This series of books approaches the same subject-matter from a different point of view. It is concerned not with institutions but with processes - with how laws, policies and decisions are formulated and implemented. It is hoped that the books in the series will, among other things, make it clearer how the institutions themselves actually function. All oft he books in the series are addressed to the general reader, to academic students ofp olitics and also to specialists in the fields with which the books deal - such fields as industrial relations, the nationalised industries, health and housing. Already published The Politics of Industrial Relations Michael Moran The Politics of Steel Keith Ovenden Poverty, Politics and Policy Keith G. Banting The Politics of Banking Michael Moran Also by Michael Moran The Union of Post Office Workers Politics and Society in Britain Series Standlnl Order H you would like to receive future titles in this series as they are published, you can make use of our standing order facility. To place a standing order please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address and the name of the series. Please state with which title you wish to begin your standing order. (H you live outside the UK we may not have the rights for your area, in which case we will forward your order to the publisher concerned.) Standing Order Service, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire, RG212XS, England. THE POLITICS OF BANKING The Strange Case of Competition and Credit Control Second Edition Michael Moran M MACMILLAN © Michael Moran 1984, 1986 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First edition 1984 Second edition 1986 Published by THE MACMILLAN PRESS LTD London and Basingstoke Companies and representatives throughout the world British Library Cataloguing in Publication Data Moran, Michael, 1946-- The Politics of banking: the strange case of competition and credit control.-2nd ed. 1. Banks and banking-Great Britain I. Title 332.1'0941 HG2988 ISBN 978-0-333-42412-4 ISBN 978-1-349-18242-8 (eBook) DOI 10.1007/978-1-349-18242-8 Filmsetting by Vantage Photosetting Co. Ltd Eastleigh and London For Winifred Contents Preface to the First Edition ix Preface to the Second Edition x 1 The Politics of Complexity 1 1 The subject of the book 1 2 Why write the book? 3 3 The politics of complexity 5 2 The Politics of Lombard Street 9 1 Custom, policy and politics 9 2 The stage and the actors 10 3 Bankers and the economy 12 4 Bankers and the Bank of England 16 5 The Bank of England and the government 22 6 Esoteric politics and monetary policy 27 3 The Politics of Policy Change 29 1 Breaking the policy code 29 2 Competition and Credit Control: a summary 30 3 Fashion and policy change 33 4 Academic enquiry and policy change 35 5 Adversary politics and policy change 39 6 Economic interests and policy change 41 7 Bureaucratic politics and policy change 47 8 The decline of esoteric politics 53 4 The Politics of the Money Supply 55 1 Control, complexity and the money supply 55 2 The quintessence of complexity: money and politics, 1971-3 58 3 Complexity triumphant: politics and money since 1974 73 viii Contents 5 Crisis, Crash, Rescue 76 1 Trust, crisis and banking 76 2 Banking, prudence and property 79 3 Law, trust and supervision 84 4 Rescuing an industry 97 6 Rules, Risks and the Law 113 1 Markets, regulation and formality 113 2 Crisis, change and regulation 114 3 Legislating for complexity 118 4 Complexity magnified: supervising supranational markets 133 7 Complexity, Trust and Policy Making 140 1 The problem of opportunism 140 2 Complexity and capitalism 144 3 Living with complexity 150 Epilogue: The Johnson Matthey Affair 163 1 Banking failure and Johnson Matthey 163 2 VVhathappened? 164 3 Why did regulation fail? 168 4 Why was Johnson Matthey rescued? 172 5 What are the consequences? 173 Notes and References 178 Index 198 Preface to the First Edition Those who helped me most with this book can only be thanked anonymously. While writing it I was able to talk to over twenty individuals - bankers, politicians and civil servants - who were closely concerned with the politics of money in the 1970s. These conversa tions - they were too informal to be called interviews - rarely provided new information, nor were they designed for that purpose. I ap proached people after writing a first draft of the book from published sources, and used the conversations to present my impressions and tentative conclusions. The responses were always stimulating and often chastening. To all who gave their time I express warm thanks. I owe a special debt to three individuals who both talked to me and subsequently made very valuable comments on a second draft of the manuscript. Comparing my impressions formed as an outsider with the views of those inside the policy machine reinforced a conviction which I have long held: that British government is much less secret than is commonly believed. Much supposedly secret information awaits the researcher, scattered in numerous, obscure but still public sources. It is a pleasure to thank by name some others who have helped me. Anthony King commissioned the book and commented on a draft in his usual meticulous and perceptive way. My colleague Martin Burch also made valuable comments on the manuscript; even more impor tant, he shared with me his views about policy making in the graduate course in Policy Analysis which we have taught together for some years. Richard Harrington generously allowed me to pick his brains about monetary economics. Mrs. Marjorie Gray and Miss Catherine Knowles turned virtually illegible manuscripts into a succession of immaculately typed drafts. The University of Manchester kindly paid some of my travelling expenses. My family helped me survive the whole experience by constantly reminding me that hardly anything is less important in life than a book about public policy. Victoria University of Manchester MICHAEL MORAN 2 September 1982 IX Preface to the Second Edition In this second edition I have added an epilogue on the most serious British banking crisis of the 1980s: the collapse of Johnson Matthey Victoria University of Manchester MICHAEL MORAN 28 October 1985
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