Normalized Financial Wrongdoing: How Re-Regulating Markets Created Risks and Fostered Inequality

382 Pages·2020·3.457 MB·English

by  Harland Prechel

N O R M A L I Z E D F I N A N C I A L
W R O N G D O I N G
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N O R M A L I Z E D
F I N A N C I A L
W R O N G D O I N G
How Re-regulating Markets Created
Risks and Fostered Inequality
Harland Prechel
Stanford University Press
Stanford, California
Stanford University Press
Stanford, California
© 2021 by the Board of Trustees of the Leland Stanford Junior
University. All rights reserved.
No part of this book may be reproduced or transmitted in any form or
by any means, electronic or mechanical, including photocopying and
recording, or in any information storage or retrieval system without the
prior written permission of Stanford University Press.
Printed in the United States of America on acid-free, archival-quality paper
Library of Congress Cataloging-in-Publication Data
Names: Prechel, Harland, author.
Title: Normalized financial wrongdoing : how re-regulating markets
created risks and fostered inequality / Harland Prechel.
Description: Stanford, California : Stanford University Press, 2021. |
Includes bibliographical references and index.
Identifiers: LCCN 2020015480 (print) | LCCN 2020015481 (ebook)
| ISBN 9781503602380 (cloth) | ISBN 9781503614451 (paperback) |
ISBN 9781503614468 (ebook)
Subjects: LCSH: Financialization—United States. | Corporations—
Government policy—United States. | Corporation law—United
States. | Corporations—Corrupt practices—United States. | Income
distribution—United States.
Classification: LCC HG181 .P74 2021 (print) | LCC HG181 (ebook) |
DDC 332/.04150973—dc23
LC record available at https://lccn.loc.gov/2020015480
LC ebook record available at https://lccn.loc.gov/2020015481
Cover design: Christian Fuenfhausen
For Helen
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Contents
List of Figures and Tables ix
List of Abbreviations xi
Preface xiii
1 The Contemporary Corporation and Private Property 1
2 Historical Transitions from Liberalism to Neoliberalism 20
3 Transforming Banks from Market Enablers
to Market Participants 65
4 Converging Economic and Political Interests 101
5 Creating Risk, Engaging in Financial Malfeasance, and Crisis 143
6 A “Great Crisis” in the FIRE Sector 177
7 The Extent and Causes of Financial Malfeasance 200
8 Inequality in the Twenty-First Century 221
9 Emancipatory Social Change 269
Notes 313
References 317
Index 337
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Figures and Tables
Figures
2.1 Prototypical Multilayer-Subsidiary Form 50
5.1 Enron’s MLSF and Selected Corporate Entities 149
7.1 FIRE Sector Alleged Security and Exchanged Commission
Violations 207
7.2 Percent of Corporations Restating Financial Statements by
Multilayer-Subsidiary Form, 1994–2004 212
7.3 Percent of Corporations Restating Financial Statements by
Total Number of Subsidiaries (Quartiles), 1994–2004 212
Tables
2.1 FIRE Sector Parent Company CEO Compensation,
2000–2007 64
5.1 Capital Raised at Enron and Selected Subsidiaries
from Stock Issuances 160
5.2 Change in Enron’s Stock Values, 1997–2002 164
7.1 Statistical Model of FIRE-Sector Financial Malfeasance,
1995–2004 208
7.2 The Odds That an Event Will Occur 213
8.1 Expenditures on Dividends and Stock Buybacks,
2007–2016 247
8.2 The Largest FIRE-Sector Corporations’ Expenditures
on Stock Buybacks, 2000–2007, and TARP Distributions 248
ix