Reviewed by Caner Bakir
After the onset of the Global Financial Crisis (GFC), Britain’s Queen Elizabeth II asked economists at the London School of Economics in November 2008, ‘Why did no one see it coming?’ Orthodox economists and political economists, and international political economy (IPE) scholars, especially those belonging to the American IPE, have had a dismal record in anticipating financial crises (Palan 2009)….
» Download the pdf.
Cayman Financial Review
October 31, 2014
Reviewed by Warren Coats
“The United States has had 14 banking crises over the past 180 years! Canada, which shares not only a 2,000-miles border with the United States but also a common culture and language, had only two brief and mild bank illiquidity crises during the same period.” And since 1839 Canada “has experienced no systemic banking crises.”
In this well-researched book, Charles Calomiris and Stephen Haber, economics professors at Columbia and Stanford Universities, respectively, explain what is responsible for the difference. In short, different countries have different banking systems as a result of the differences in the political bargains struck between political coalitions in different countries or in the same country at different times. It is the result of what the authors call the “game of bank bargains.”
» See full article in the Cayman Financial Review
September 22, 2014
Reviewed by Vern McKinley
Charles Calomiris and Stephen Haber have taken on a big task in their book, Fragile by Design: The Political Origins of Banking Crises and Scarce Credit. Their goal is to explain the double hit that economies and financial systems suffer when they experience a banking crisis and then the tightening of credit that often follows. In order to keep the final product manageable, and thus avoid having a 2,000 page book, the authors limit their case studies to the United Kingdom, United States, Canada, Mexico, and Brazil. Their time frame extends back to the 17th century. At its core, their argument is that financial crises are not random; they flow from the “Game of Bank Bargains”—that is, political deals that dictate everything in a banking system from the issuance of licenses to the means for distribution of credit.
» See full article in the Cato Journal
Reviewed by Hugh Rockoff
Charles W. Calomiris and Stephen H. Haber, two of America’s leading financial historians, have written an ambitious and in my view a largely successful book to provide an explanation for the political economy of banking through history and across nations. The central question is why some banking systems provide both abundant credit and financial stability over long periods while others, including unfortunately the financial system of the United States, fail to do so.
» See full article on EH.net
The Federalist Society
August 04, 2014
Reviewed by Andrew Olmem
For most people, the Financial Crisis of 2008 was an unexpected, unforgettable, and harrowing event. For Charles Calomiris of Columbia University and Stephen Haber of Stanford University, however, the crisis was just the latest in a long series of banking crises throughout American history. By their count, the United States has endured 12 banking crises since 1840. In their view, the more surprising and consequential number is the number of banking crises experienced by Canada during the same time period: zero.
In Fragile by Design, Calomiris and Haber set out to explain why some countries, like the United States, appear prone to banking crises, while other countries, like Canada, have been crisis free. Their conclusion is that it all comes down to politics. While this may appear to be an easy answer, their account of how politics shapes banking systems is a must-read for anyone interested in understanding the complex, political foundations of banking.
» See full article in The Federalist Society.
March 21, 2014
Reviewed by Vicky Pryce
Politicians here and elsewhere have made their name by attacking bankers’ greed, other countries’ mistakes, globalisation, deregulation, central bankers’ blindness, too loose monetary policy, you name it-except usually themselves. There is no denying that these issues matter and contributed to inflaming the 2008 crisis. All sorts of new ideas on how to make the system safer are constantly being suggested and many being implemented- increasing capital requirements; (forlorn) attempts to restrain bankers’ bonuses; ring-fencing retail and investment banking; abolishing proprietary dealing (the Volker rule); increasing competition; or setting up proper resolution regimes for ‘ too big to fail’ banks…
» See full article in the The Independent.
Journal of Regulation and Risk
Volume VI, Issue I – Spring, 2014
Reviewed by Alex J. Pollock
Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, by Charles Calomiris and Stephen Haber, combining their scholarship of banking and political institutions, is a book full of fertile ideas, instructive histories of the evolution of a number of banking systems, and provocative interpretations of the co-dependency between banks and governments.
» See full article in the Journal of Regulation and Risk.
The Politics of Banking
May 5, 2014
Reviewed by Diana Furchtgott-Roth
If you have time to read only one book about the causes of the 2008 financial collapse, read this one. You will discover that the banking crises that occur in some countries but not others are part of the “fragile design” of the banking system. They are not simply random occurrences, but come about as the product of political systems, part of a bargain among competing political interests….
» See full article in the National Review Online.
Reviewed by Andrew Hilton
Charles Calomiris is a financial economist at Columbia. Stephen Haber is a political scientist at Stanford. Both are fairly robust free marketers, associated with the American Enterprise Institute and the Hoover Institution, and both are pretty distinguished in their fields — which means their magisterial (570 pages) volume on what they (inelegantly) call the “Game of Bank Bargains” is worth some bath time…
» Click here to download the pdf.
How Banks Fail
April 11, 2014
Reviewed by Liaquat Ahamed
Five years after the drama that began in 2008 — the failure of one bank after another, the decline in the stock market and the freezing up of finance — we still cannot seem to agree about the causes of the crisis. There are some who like to pin all the blame on the corrupt business practices of Wall Street and the greed of bankers…
» See full article in the New York Times Sunday Book Review.