Understanding America's Hesitant Steps Toward Financial Capitalism: Politics, the Depression, and the Separation of Commercial and Investment Banking

Few would disagree that the Glass-Steagall Act of 1933 is thecontinental divide in American financial and banking history. Bydisallowing banks from getting involved in the investment bankingindustry, this Act imposed an institutional change that shaped howfinancial institutions conduct their business, even today in itsdecline. Conventional wisdom has it that the Act was enacted tocorrect the ``deficient'' financial system that existed during theperiod. In this paper we investigate whether this assertion can beempirically verified by analyzing the Senate vote on a predecessorof this Act (which included the clause separating commercialbanking from investment banking activities). Using multinomiallogits, we examine what may have motivated senators to vote for itspassage. The econometric evidence indicates that the Senate votewas significantly influenced by important interest groups(including national banks as well as manufacturing sectorinterests), despite the large populist outcry for financial marketreforms at the onset of the Depression.     

“The Color of Money” revisited: Racial lending patterns in Atlanta's neighborhoods

Abstract

In 1988, the Atlanta Journal‐Constitution published “The Color of Money,” an influential series examining mortgage redlining in Atlanta. The articles documented wide lending disparities between white and black neighborhoods of similar income levels. Given sweeping changes in housing finance since 1988, we seek to determine whether Atlanta's racial geographic disparities in mortgage lending have changed.

Analysis of 1992 to 1996 Home Mortgage Disclosure Act data reveals slight improvement. Atlanta's depository lenders made 4.2 times as many conventional home purchase loans per owner‐occupied unit to middle‐income white neighborhoods as they did to middle‐income black neighborhoods; a decade earlier, this ratio was 5.2. Nondepositories post lower ratios, particularly for Federal Housing Administration‐insured loans, but this market segment raises concerns because of potential abuses. By the indicator of most enduring theoretical and policy interest—conventional home purchase lending by depositories—the patterns that aroused concern a decade ago are still evident today.     

Private and public choices in public education: An investigation of trustee effects

The paper applies the concepts of the horizon problem, agency costs, monitoring, and special interest incentives to trustee management of public schools and higher education. We examine whether South Carolina's 1984 Education Improvement Act, a major restructuring of educational organization and spending in South Carolina, is related to the ratio of pupils in private versus public schools. We employ 30 years of county level data in South Carolina, and we uncover several things. There is no statistically credible relation between public school expenditures per pupil and the private school/public school enrollment ratio. However, we do find that the directed changes in rules, organizational structure, and incentives mandated by the 1984 Educational Improvement Act are associated with a reduction in the relative number of children attending private school. We interpret this to mean that the features of the law requiring better accountability and the like were perceived by parents to make for better education while the increased money spent was only a transfer to teachers or some other groups; we find that organization matters more than money.     

Race,Representation, and the Voting Rights Act

Despite wide scholarly interest in the Voting Rights Act, surprisingly little is known about how its specific provisions affected Black political representation. In this article, we draw on theories of electoral accountability to evaluate the effect of Section 5 of the Voting Rights Act, the preclearance provision, on the representation of Black interests in the 86th to 105th congresses. We find that members of Congress who represented jurisdictions subject to the preclearance requirement were substantially more supportive of civil rights–related legislation than legislators who did not represent covered jurisdictions. Moreover, we report that the effects were stronger when Black voters composed larger portions of the electorate and in more competitive districts. This result is robust to a wide range of model specifications and empirical strategies, and it persists over the entire time period under study. Our findings have especially important implications given the Supreme Court's recent decision in Shelby County v. Holder.     

Foxhunting and the Conservatives

The Conservatives are pledged to have a free vote in Parliament on legislation in Government time to reverse the 2004 Hunting Act. This Act bans hunting with dogs. The Countryside Alliance has opposed the Hunting Act as part of campaigns to defend its notion of rural interests. The Countryside Alliance's success in gaining the Tory pledge could be underscored by a Tory hope that hunting supporters give decisive support for Tory candidates in marginal Parliamentary constituencies. However, the Tory leadership may find it politically difficult to give early priority to legislative attempts to repeal the Hunting Act. Moreover, it is likely to require a large Tory majority and years of waiting before a Tory government is able and willing to complete a repeal of the hunting ban.     

The Bush Administration's Proposal for Credit Reform: Background, Analysis, and Policy Issues

Large recent and forecasted federal outlays to cover losses on deposit insurance and federally-assisted credit have increased concern in the executive and legislative branches about potential future liabilities of the federal government. These potential liabilities include federal credit; consequently, this renewed interest in federal credit reform. Credit reform would have to change the budgetary treatment of federal direct loans and federal guaranteed loans. Currently, the unified budget measures the cost of federal credit on a cash flow basis. Critics (including the Bush Administration) maintain that the appropriate budgetary measure of the costs of federal credit is the present value of the subsidies to credit recipients in the fiscal year that the credit is advanced. The Bush Administration's proposal for credit reform is presented in most detail in the Federal Credit Reform Act of 1989 (the Act), which was proposed but not enacted. The Act would have had federal officials estimate credit subsidies based on the equivalent interest rates in private credit markets. These subsidies would have been used to measure the budgetary cost of federal credit and would have required annual appropriations. Two credit revolving funds would have been established in the Treasury to finance credit flows. Many of these credit reform practices were included in the Omnibus Budget Reconciliation Act of 1990 though.     

Writing the regulations for health

The development of regulations in health is much more than a purely technical procedure. Rather, it involves decisionmaking and bargaining processes that engage a wide range of individuals and organizations with diverse interests and varied resources. Attempts at statutory precision and goal clarification may improve, but will not fundamentally alter the regulation writing experience. The dynamics of regulations development are revealed in three cases. The primary case, The Health Maintenance Organization Act of 1973, suggests that despite the efforts of the regulations writers themselves, there are limits to the extent to which basic interest conflicts and questions of health policy can be resolved in the process. Other cases examined are the Professional Standards Review Organization Act of 1972 and the National Health Planning and Resources Development Act of 1974.     

An Additional Form of Appropriation: A Note

Forms of appropriations continually evolve as Congress attempts to balance the interest of the appropriations committees against those committees and program supporters interested in assuring funding for their priorities. The 21st Century Cures Act is the latest attempt to balance these forces. The Act contains a two-step process (i) the creation of an account via mandatory appropriations and (ii) the added requirement that funds be appropriated from the account via the annual appropriations process in order to be available for programmatic activity.     

Oak Leaves and the origins of the 1927 Radio Act: Comment

The Radio Act of 1927 was enacted so as to pre-empt the common law property rights then being asserted over radio waves, thus facilitating a political equilibrium where broadcasters and regulators shared license rents. The Oak Leaves case of November 1926, awarding AM frequency rights to a private broadcaster on the homesteading principle, helped motivate Congress, steering it towards a “public interest” licensing law. The Twight paper, while ostensibly critiquing this now standard view in the law and economics literature, actually endorses it. The existing history stands corroborated, uncorrected.     

Police bureaucracies,their incentives,and the war on drugs

After 1984 local law enforcement agences in the U.S. substantially increased arrests for drug offenses relative to arrests for property and violent crimes. This paper explores why this reallocation of police resources occurred, focusing on alternative “public interest” and bureaucratic self interest explanations. The Comprehensive Crime Act of 1984 is shown to have altered the incentives of police agencies by allowing them to keep the proceeds of assets forfeited as a result of drug enforcement activities. Empirical evidence is presented which shows that police agencies can increase their discretionary budgets through the asset forfeiture process.     

Interest Groups and Investment: A Further Test of the Olson Hypothesis

Mancur Olson's institutional sclerosishypothesis may be evident in the effects ofinterest groups on investment in physicalcapital. To test this proposition, we usecross sectional data on 42 countries forwhich information on the number of interestgroups is available to estimate the effectof those groups on the share of GDP thatgoes into physical investment. The resultsindicate that interest groups have adifferent effect on physical investment inOECD and non-OECD countries. In the OECDcountries, we find support for thehypothesis that interest groups harminvestment in physical capital. Indeveloping countries, interest groupseither have no effect on physicalinvestment or they have a slight beneficialimpact.     

Religion and the Scottish Independence Referendum

The Scottish independence referendum debate, like the Act of Union of 1707, has significant religious dimensions. The Act gave special recognition through the monarch to the Presbyterian Church of Scotland. The Church, a national church, has not yet declared a position on independence, but is seeking to protect its existing privileges whatever the result. The Roman Catholic Church, recognised by the Scottish Parliament, unlike its formal rejection by the UK Parliament and monarchy, symbolically associates itself with the case for independence. Paradoxically, Catholics supporting independence subject themselves, in their religious lives, to an authoritarian foreign power. The SNP Scottish Government attempts to draw Roman Catholic support for independence from its traditional support base in the Labour Party by cultivating a sense of religious grievance that is not justified by the evidence. Old religious divisions are still relevant but non‐religion is growing fast and resulting in new perspectives on the independence debate.     

POLICY FOR THE'DESERVING,'BUT POLITICALLY WEAK: THE 1996 WELFARE REFORM ACT AND BATTERED WOMEN

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Public Law #104–193) is perhaps the most visible national legislation since the sweeping Civil Rights laws of the 1960s. For social policy so well entrenched into the American social fabric, the rapidity with which reforms swept through the welfare system was unprecedented and confound conventional theoretical pronouncements on bureaucracy and policy change. The swiftness of reform, and the political rhetoric that surrounded the 1996 Welfare Reform Act, have prompted criticism that reformers responded more to the social construction of welfare recipients than they did to the dictates of sound public policy (Magusson and Dunham, 1996). This article discusses the ramifications of the 1996 Welfare Reform Act for battered women and concludes that battered women's social construction as deserving of public assistance, but politically weak, precipitated welfare reform policy, targeted to battered women, that has been largely rhetorical rather than substantive.     

Implementing the Chief Financial Officers Act and the Government Performance and Results Act in the Federal Government

The Chief Financial Officers Act of 1990 and the Government Performance and Results Act of 1993, along with other legislation passed by Congress, are stimulating major financial management reform in the federal government. This article evaluates reform implementation against nine criteria developed in previous research on this topic. The criteria are accounting system adequacy, congressional intent, ability of Congress to use financial statement data, executive branch implementation incentives, capability of the Office of Management and Budget, utility of financial statements for decision making, use of performance measures in budgeting, coordination of federal organizations charged with implementation responsibility, and executive and congressional support for reform.     

Victoria: Rolling Back – or Reinventing – the Kennett Revolution?

The election of the Kennett government in 1992 heralded an era of unprecedented change in public sector employment and industrial relations in Victoria. The Employee Relations Act 1992 and the Public Sector Management Act 1992 redefined the public sector in Victoria and the relationship, both collective and individual, of public sector employees with government. In October 1999 the Kennett government unexpectedly lost office. But despite its pre-election rhetoric promising a return to more conventional arrangements, there is little indication that the Bracks government intends to significantly dismantle the Kennett legacy in public sector employment and industrial relations.     

Fixed‐Term Parliaments and the Challenges for Governments and the Civil Service: A Comparative Perspective

The Fixed‐term Parliaments Act significantly reduces the powers of the Prime Minister to manage the risk of government termination and to time elections to his or her party's advantage. In this paper we ask how the Act is likely to change the way in which governments terminate, their durability and opportunities for planning in government and departments. In answering these questions we draw on quantitative comparative evidence from other European countries that operate with fixed‐term parliaments. Our analysis suggests that fixing the parliamentary term can be expected to convert some opportunistically called elections into regular elections and to stabilise governments toward the end of the parliamentary term. But the Act is also likely to have unanticipated consequences in increasing governments’ vulnerability to failure before they reach the final sessions of Parliament. We explore these unanticipated consequences and outline their implications for governing style and Civil Service planning.     

From voluntary to mandatory corporate accountability: The politics of the German Supply Chain Due Diligence Act

Following a long-standing and highly contested policy debate, in June 2021, the German parliament passed the Supply Chain Due Diligence Act requiring mandatory due diligence (MDD) of large companies, holding them accountable for the impacts of their supply chain operations abroad. Applying the discursive agency approach and using evidence from policy documents and 21 interviews with key stakeholders, we analyze the political strategies that paved the way toward MDD in Germany. The decisive strategy was an innovative benchmarking and monitoring mechanism that provided the legitimacy for a law and opened a window of opportunity for MDD supporters. Civil society and supportive politicians used this window of opportunity to build broad political coalitions that included the support of some companies. We discuss the ramifications of these findings for understanding the domestic politics behind the newly emerging norm of foreign corporate accountability.     

The Regulatory Gift: Politics,regulation and governance

This article introduces the “regulatory gift” as a conceptual framework for understanding a particular form of government‐led deregulation that is presented as central to the public interest. Contra to theories of regulatory capture, government corruption, “insider” personal interest, or profit‐seeking theories of regulation, the regulatory gift describes reform that is overtly designed by government to reduce or reorient regulators’ functions to the advantage of the regulated and in line with market objectives on a potentially macro (rather than industry‐specific) scale. As a conceptual framework, the regulatory gift is intended to be applicable across regulated sectors of democratic states and in this article the empirical sections evidence the practice of regulatory gifting in contemporary United Kingdom (UK) politics. Specifically, this article analyses the 2011 UK Public Bodies Act, affecting some 900 regulatory public bodies and its correlative legislation, the 2014 Regulator's Code, the 2015 Deregulation Act, and the 2016 Enterprise Bill. The article concludes that while in some cases the regulatory gift may be aligned with the public interest – delivering on cost reduction, enhancing efficiency, and stimulating innovation – this will not always be the case. As the case study of the regulatory body, the UK Human Fertilisation and Embryology Authority, demonstrates, despite the explicit claims made by legislators, the regulatory gift has the potential to significantly undermine the public interest.     

The Administrators of Democracy: A Research Note on Local Election Officials

Local election officials are the administrators of democracy, but we know little about their views. This paper draws from two national surveys of local election officials. The authors find that local election officials generally support the goals of the federal Help America Vote Act but are less enthusiastic about the actual impact of the legislation. Implementation theory helps explain their evaluation of federal reforms. Goal congruence with reform mandates, resource availability, and a willingness to accept federal involvement predicts support for these reforms. Federal policy changes have promoted electronic systems, and some of the authors' findings are relevant to research on e-government. Users of electronic voting machines tend to have high confidence in them despite the significant criticism the machines have faced. Local election officials who support e-government generally are more likely to more positively evaluate federal reforms.     

Politics and Constitutional Reform in Canada: A Study in Political Opposition

Political opposition in a federal system is particularly richand complex, involving not only political parties and pressuregroups, but constitutionally sovereign governments as well.This article examines political opposition in a federation througha case study of the mobilization of opposition to the CanadianConstitution Act. Introduced by the federal government in 1980,the Act proposed a series of important changes in the powersof Canada's ten provinces. The resistance offered by a numberof provinces, the two opposition parties holding seats in Parliament,and a handful of interest groups were sufficient to secure significantchanges in the Act. The analysis presented here demonstratesthe key role of provincial governments—and especiallyof provincial premiers—as oppositional actors, while indicatingthe importance of the courts and intergovernmental conferencesas sites where political opposition expresses itself in a federation.