Bank Failure: The Politicization of a Social Problem

Abstract

Several books have been written recently on the collapse of the banking industry in the United States. These books are enlightening to the extent they detail the economic problems facing the industry and propose constructive solutions for resolving the crisis. Unfortunately, the books fail to provide a convincing account of the cause of the current problems in the banking industry. Ultimately, the problems facing the American banking industry are political, not economic. Thus, solving the banking crisis will require meaningful change in the underlying political environment. While these books adequately explain how a rational regulatory system would deal with our current problems, they fail to explain why such a system does not exist.