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17 British J. Pol. & Int'l Rel. 1 (2015)

handle is hein.journals/bhjlplcs17 and id is 1 raw text is: BJPIR: 2015 VOL 17, 1-22 Masters of the Universe but Slaves of the Market: Bankers and the Great Financial Meltdown Stephen Bell and Andrew Hindmoor Research Highlights and Abstract • This article focuses on the banking crisis in the US and UK. • It is essential to understand banker agency and the institutional and structural contexts which shaped such agency. • Bankers experienced variegated patters of constraint and opportunity. At one level institutional theories that emphasise institutional constraint cannot easily account for the authority and agency enjoyed by key bankers. • On the other hand, bankers were heavily influenced by institutional change in the shape of market 'liberalisation', which produced intense levels of competition and pressures to achieve higher profit returns: an exacting form of market discipline. Bankers and financiers in the US and UK modified institutions and revolutionised the banking industry prior to the 2007-8 crisis. These agents were however heavily constrained and eventually overwhelmed by institutional pressures and wider structural forces that encouraged high-risk leveraged trading and which generated systemic risk. To account for this, institutional theory needs to incorporate a broader canvas of conditioning contexts, particularly the impact of structural or systemic forces on agents and the way in which these are actualised as a form of 'ecosystem power'. Keywords: banking; financial crisis; historical institutionalism; systemic risk This article focuses on the banking crisis that peaked in 2008 in the US and UK. It argues that the interaction between bankers and the institutional and structural contexts they helped create is central to explaining both the origins and the scale of the crisis. To explore such interactions between agents and context we use historical institutional (HI) theory. Recent versions of such theory explain how agent's behaviour is shaped (i.e. constrained or enabled) by the contexts in which they operate. The core explanatory dynamic in this approach is to explore how agents and wider contexts mutually shape one another over time. We highlight two arguments. First, we use a comparative approach to show that a key set of institutional pressures as well as specific profit opportunities embodied in nationally specific banking markets were central in shaping banker behaviour: either producing or not producing strong pressures on banks to engage in highly leveraged mortgage-backed securities trading. In the US and UK, financial markets imposed strong competitive pressures and placed bankers under intense pressure to SSSS. Political Studies © 2014 The Authors. British Journal of Politics and International Relations © 2014 -iirii~i Association Politica Studies Association doi: 10.1111/1467-856X.12044

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