The 'ebb and flow' of transatlantic regulatory cooperation in banking

Do financial crises promote or hamper transatlantic regulatory cooperation in banking? This article argues that financial crises have an impact upon the alignment of regulatory preferences of the United States (US) and the European Union (EU), causing an 'ebb and flow' in transatlantic cooperation. When EU-US preferences are broadly aligned in periods of financial stability, transatlantic regulatory cooperation is intense. It is relatively easy for the EU and US to agree on market-friendly regulation promoted by banks. When preferences are different, especially in the context and aftermath of the exogenous shock of financial crises, transatlantic cooperation is more problematic because crises re-assert the importance of nationally embedded patterns of market organisation

A Tale of Two Markets: How Lower-end Borrowers Are Punished for Bank Regulatory Failures in Nigeria

In 2009, the Nigerian banking system witnessed a financial crisis caused by elite borrowers in the financial market. Regulatory response to the Nigerian crisis closely mirrored the international response with increased capital and liquidity thresholds for commercial banks. While the rise of consumer protection on the agenda of prudential supervisors internationally was logical in that consumer debt was the main cause of the global recession, the Nigerian banking reforms of 2009 disproportionately affected access by poorer consumers, who ironically had little to do with the underlying causes of the crisis. As lending criteria become more stringent, poorer consumers of credit products are pushed into informal markets because of liquidity-induced credit rationing. Overall, consumer protection is compromised because stronger consumer protection rules for the formal sector benefits borrowers from formal institutions who constitute the minority of borrowers in all markets. While the passage of regulation establishing credit bureaux and the National Collateral Registry will, in theory, ease access to credit especially by lower-end borrowers, the vast size of the informal market continues to compound the information asymmetry problem, fiscal policies to tackle structural economic issues such as unemployment and illiteracy remain to be initiated, and bank regulators continue to pander to elite customers with policy responses that endorse too big to fail but deems lower-end consumers too irrelevant to save. The essay concluded that addressing the wide disparity in access to credit between the rich and poor through property rights reforms to capture the capital of the informal class, promoting regulation to check loan concentration, and stimulating competition by allowing Telecommunication Companies (TELCOs) and fintech companies to carry on lending activities because of their superior knowledge of lower-end markets will facilitate greater access. The risk of systemic failure deriving from consumer credit in Nigeria is insignificant compared to the consumer vulnerabilities resulting from the exposure of consumers to unregulated products in the informal market

The pax americana and development

Development in its many iterations was born from the needs of the Pax Americana to create reliable and competent compradors, plus viable trading partners in order that its post-1945 informal empire would function. This chapter will examine the way the Pax Americana replaced Europe’s formal empires, the reason informal empires need comprador partners, and the difficulties encountered by the Pax Americana with identifying and appointing satisfactory comprador partners. The relationship between this “comprador problem” and the founding of a development industry and aid industry will be unpacked, as will the core assumption underpinning Pax Americana “development.” The differences between Pax Americana and Pax Britannica governance and development will also be examined, as will the continuities and discontinuities between these two varieties of imperialism. The idea of “development” emerged in the 1950s as one of the consequences of howWorldWar II transformed the world by replacing British global hegemony with the Pax Americana (see Louw PE Roots of the Pax Americana. Manchester University Press, Manchester, 2010). Before this war European empires (especially the British Empire) straddled the globe, while the USA found itself in the frustrating position of being a new rising global power which kept finding its opportunities for expanding its trade thwarted by the fact the Europeans had gotten there first. And so, even before America had entered World War II, the US State Department had established working committees charged with conceptualizing how to terminate European imperialism through decolonization (O’Sullivan CD Sumner Welles, postwar planning, and the quest for a new world order. Columbia University Press, New York, 2008: chapter 4), plus how to replace Europe’s formal empires with an American informal empire. After 1945, American power was used to implement this State Department planning such that Europe’s empires were deconstructed and a Pax American trading empire constructed in their place. This shift from formal empire to informal empire is significant because it created conditions that produced the “development” phenomenon