Market Rules: Bankers, Presidents, and the Origins of the Great Recession.

• Author: O'Reilly, Colin

* Market Rules: Bankers, Presidents, and the Origins of the Great Recession

By Mark H. Rose

Philadelphia: University of Pennsylvania Press, 2019.

Pp. xiii, 258. $39.95 hardcover.

In Market Rules, Mark Rose describes the historical roots of the financial industry through narratives about major figures in banking and politics since the 1960s. He focuses on how the intersecting interests of presidents seeking better economic performance and bankers seeking to expand their firms reshaped the rules of the game in the financial industry. Narratives about the most influential bankers in the past fifty years show that rules governing the banking and financial industries are the product of the political process.

For Rose, the rhetoric of unfettered markets, competition, and deregulation usually masks the true intention of politicians, regulators, and bankers, who are actually interested in different rules rather than no rules. He dubs this rhetorical bait and switch "market talk." Presidents from John Kennedy to Donald Trump and the regulators they appointed are at the center of changes to financial regulation since the 1960s. Market Rides focuses on four bankers, three of whom became regulators, who worked to change rules that balkanized the banking industry to rules that supported large multipurpose banks--the so-called supermarket banks common today.

The featured banker of the first chapter is James Saxon of First National Bank, who was appointed comptroller of the currency in 1961 by President Kennedy. According to Rose, Saxon's actions promoting the growth of banks aligned with Kennedy's interest in economic growth. Through his description of Saxon's successes and failures, Rose sets the stage for the tussle between interest groups to follow, describing how a "grinding politics in die form of endless litigation and lobbying emerged as a standard feature of bank politics" (p. 38).

Chapter two focuses on Donald Regan, the banker who helped build Merrill Lynch as it became a prototype of the "supermarket" banks to come. By focusing on Regan, Rose describes the process of regulatory arbitrage between state and national regulators that forged Merrill Lynch. Regan's second career began in 1981 as Treasury secretary to President Ronald Reagan. As described by George Stigler and applied recently to the financial industry by Brink Lindsey and Steven Teles (The Captured Economy [New York: Oxford University Press, 2017], pp. 35-63), among others...