Bank bailouts in the aftermath of the collapse of Lehman Brothers and the onset of the Great Recession brought into sharp relief the power that the global financial sector holds over national politics, and provoked widespread public outrage. In The Power of Inaction, Cornelia Woll details the varying relationships between financial institutions and national governments by comparing national bank rescue schemes in the United States and Europe. Woll starts with a broad overview of bank bailouts in more than twenty countries. Using extensive interviews conducted with bankers, lawmakers, and other key players, she then examines three pairs of countries where similar outcomes might be expected: the United States and United Kingdom, France and Germany, Ireland and Denmark. She finds, however, substantial variation within these pairs. In some cases the financial sector is intimately involved in the design of bailout packages; elsewhere it chooses to remain at arm’s length.

Such differences are often ascribed to one of two conditions: either the state is strong and can impose terms, or the state is weak and corrupted by industry lobbying. Woll presents a third option, where the inaction of the financial sector critically shapes the design of bailout packages in favor of the industry. She demonstrates that financial institutions were most powerful in those settings where they could avoid a joint response and force national policymakers to deal with banks on a piecemeal basis. The power to remain collectively inactive, she argues, has had important consequences for bailout arrangements and ultimately affected how the public and private sectors have shared the cost burden of these massive policy decisions.

Prof. Dr. Cornelia Woll

2013–present Professor of Political Science, Sciences Po Paris

2012–present Director at the Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo), Paris

2012–present Research Associate at the Max Planck Institute for the Study of Societies, Cologne, and Affiliated Faculty Member of the International Max Planck Research School on the Social and Political Constitution of the Economy (IMPRS-SPCE), Cologne

2011–2014 Co-Founder and Co-Director of the Interdisciplinary Center for Public Policy Evaluation (LIEPP) at Sciences Po Paris

2008–2012 Associate Dean for Research, Sciences Po, Paris

2011–2012 Visiting Scholar, Minda de Gunzburg Center for European Studies, Harvard University

2009–2012 Head of Otto Hahn Junior Research Group funded by the Max Planck Society at the Max Planck Institute for the Study of Societies, Cologne, and Sciences Po, Paris

2006–2013 Tenured Research Fellow, Center for International Studies and Research (CERI), Sciences Po, Paris

2002–2006 Research Fellow, Max Planck Institute for the Study of Societies, Cologne

2002–2003 Stays as a visiting researcher at American Institute for Contemporary German Studies, Johns Hopkins University and BMW Center for German and European Studies, Georgetown University (both in Washington, DC), and at European University Institute, Florence