The Power of Banks and Governments

This article examines Cornelia Woll’s book on the “power of collective inaction” in which she argues that banks could extract favorable bailouts in the recent global financial crisis by remaining collectively inactive. Collective inaction forces governments to bear the brunt of the crisis resolutions. While this book provides an illuminating account of banking bailouts in several countries, its argument neglects the power of governments and of individual banks. Governments did not have to wait for banks’ (in)action but could impose punitive conditions on banks. And the resistance by banks did not originate from an incapacity to act collectively but from deliberate actions by individual banks to obstruct government intrusion. Rather than inaction on the part of banks, these interactions between governments and banks involved deliberate action and their outcome depended on more conventional notions of state-business power relations.