Deregulation let non-finance firms pursue financial activities, fueling debt expansion

Evidence

A series of deregulations and new policies were designed to unleash capital flow into the financial markets ðTomaskovic-Devey and Lin 2011Þ. Most notably, Reagan-appointed banking regulators started to give non- finance firms permission to engage in financial activities but exempted them from the scope of regulatory agencies. Further financial deregulation proceeded through the 1990s, culminating in the 1999 Financial Services Modernization Act, which scrapped the only remaining prohibitions in the 1933 Glass-Steagall Act. What ensued in the last quarter of 20th century was an explosion of government, corporate, and household debt and an everexpanding securities market. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 40

Categorization

• XREF: Connects to the reader’s financialization research thread on regulatory origins of finance-led growth; pairs with Tomaskovic-Devey and Lin. — connects to: Deregulation in the 1980s pushed corporations to bypass banks entirely — Mark Blyth, Austerity: The History of a Dangerous…, 78; Stagnating growth plus deregulation pushed firms from production into financial investment — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 41; Nonfinance firms increasingly derived income from financial markets — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 18 (+8 more)

Related

• Stagnating growth plus deregulation pushed firms from production into financial investment (similarity 0.89)
• Legislative deregulation drove the US financial sector’s postwar expansion (similarity 0.87)
• Deregulation in the 1980s pushed corporations to bypass banks entirely (similarity 0.84)
• 1999 repeal of Glass-Steagall drove America’s debt and securities explosion (similarity 0.84)
• Financialization accelerated through 1970s-80s deregulation and state support (similarity 0.83)
• Financialization resulted from deliberate deregulatory political choices, not market forces. (similarity 0.82)
• US financialization accelerated sharply after 1980 deregulation (similarity 0.80)
• Nonfinance firms increasingly derived income from financial markets (similarity 0.79)
• A bipartisan deregulatory wave dismantled US financial separation statutes (similarity 0.79)
• Financialization comprises both finance-sector dominance and nonfinance firms’ financial investing. (similarity 0.78)

Broader Connections

• Nonfinance firms increasingly derived income from financial markets #corroborates (0.85) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 18
• Major nonfinancial corporations shifted their earnings toward financial operations #corroborates (0.85) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 45
• Non-financial firms increasingly resemble financial corporations through revenue reliance #corroborates (0.82) — Greta R. Krippner, The Financialization of the American…, 136
• Financialization accelerated through 1970s-80s deregulation and state support #corroborates (0.80) — Andrew deWaard, Derivative Media, 488
• Financialization is integral to capitalism, not a product of deregulatory excess #contradicts (0.80) — Max Haiven, Cultures of Financialization, 34
• Neoliberal deregulation replaced social protection with credit and indebtedness #corroborates (0.78) — Wendy Brown, Undoing the Demos, 746
• Hostile takeovers in the 1980s drove the financialization of corporations #corroborates (0.72) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 49
• Debt and finance work biopolitically to produce compliant self-financing subjectivities #expands (0.72) — Max Haiven, Cultures of Financialization, 90