Such differences are often ascribed to one of two conditions: either the state is strong and can impose terms, or the state is weak and corrupted by industry lobbying. Woll presents a third option, where the inaction of the financial sector critically shapes the design of bailout packages in favor of the industry. She demonstrates that financial institutions were most powerful in those settings where they could avoid a joint response and force national policymakers to deal with banks on a piecemeal basis. The power to remain collectively inactive, she argues, has had important consequences for bailout arrangements and ultimately affected how the public and private sectors have shared the cost burden of these massive policy decisions.
Cornelia Woll is Professor of Political Science at Sciences Po Paris and Co-Director of MaxPo and LIEPP. She is the author of Firm Interests: How Governments Shape Business Lobbying on Global Trade, also from Cornell, and coeditor of Economic Patriotism in Open Economies.