Regulation and the Role of Law in Economic Crisis
This paper contributes to the current debate on responses to the financial crisis and the role of law in paving a way out of recession, by highlighting the persistence of market-centred theories that defined the state-market relationship before the crisis. The paper begins by discussing the concept of regulation itself and discusses the extent to which the ‘credit crunch’ has shaken belief in modern capitalism. The paper then offers a discussion on the relationship of deregulation to financial crisis, arguing that there is a direct link between the receding reach of the state and market instability, drawing analogies with previous instances of market failure, like the Great Depression. On the basis of this connection, a theoretical portrayal of perceptions of the role of law in modern capitalism is attempted, where the main message is that dominant, modern perceptions of the state-market relationship allow a role for regulation but still do not recognise the state as the legitimate author of such regulation, showing a preference for market-led solutions. The paper then tests these findings against state actions in response to the ‘credit crunch’ and concludes by offering the suggestion that while the current financial crisis has shown the limitations of modern capitalism, and while it is possible that a fundamental rethink of the role of the state in the market may take place as a consequence, this rethink has yet to materialise in policy proclamations and government aspirations on a global scale. 
“This financial system is no more! It has ceased to be! ‘It’s expired and gone to meet its maker! ‘It’s a stiff! Bereft of life, it rests in peace! If you hadn’t nailed ‘it to the tax payer’s perch it’d be pushing up the daisies! ‘Its metabolic processes are now ‘istory! ‘It’s off the twig! It’s kicked the bucket, it’s shuffled off its mortal coil, run down the curtain and joined the bleedin’ choir invisible!! THIS IS AN EX-FINANCIAL SYSTEM!!”
(Willem Buiter, 26 November 2008)
Emerging market bank rescues in an era of finance-led neoliberalism: A comparison of Mexico and Turkey
ABSTRACT The international community and many financial experts have singled out the positive elements of how strong institutional reforms following Mexico's 1995 and Turkey's 2001 banking crisis have shielded their banking sectors today from the wider economic impact of the world financial crisis. By contrast, this article argues from a historical materialist analytical approach that the 1995 and 2001 bank rescues and reforms preserved, renewed, and intensified the structurally unequal social relations of power and class characteristic of finance-led neoliberal capitalism in forms institutionally specific to Mexican and Turkish society. The post-crisis reforms reinforced the dominance of banking and finance capital in Mexico and Turkey at the expense of popular classes and society in general, and it is this dynamic of power that explains the resilience of banks today.
The privatization of the Mexican banking sector in the 1990s: from debacle to disappointment
Purpose – The purpose of this paper is to examine the two‐step process of bank privatization in Mexico in the 1990s that necessitated a government bailout quite costly to Mexican taxpayers, and which has become emblematic as a cause of resentment against market liberalization among the Mexican public in recent years. This paper seeks to identify lessons to be learned from bank privatization in an important emerging market.Design/methodology/approach – Information was collected through secondary sources and field research in Mexico and abroad.Findings – The findings in this paper indicate that the bank privatization process was characterized by inadequate regulatory and financial controls which permitted large‐scale corruption and fraud resulting in a subsequent bank bailout by the Mexican Government. This created a major transfer of wealth from Mexican taxpayers to some of Mexico's wealthiest citizens, who owned or operated banks after the first wave of privatization. The subsequent sale of Mexican banks ...