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We use normal accident theory to analyze the financial sector, especially that part of the financial sector that processed home mortgages, and the mortgage meltdown. We maintain that the financial sector was highly complex and tightly coupled in the years leading up to the mortgage meltdown. And we argue that the meltdown exhibited characteristics of a system or normal accident; the result of a component failure (unusually high mortgage defaults) that, in the context of unique conditions (which included low interest rates and government policy encouraging home loans to less credit-worthy households), resulted in complex and tightly coupled interactions that financial elites and government officials were ill-equipped to control. We also consider the role that agency and wrongdoing played in the design of the financial system and the unfolding of the mortgage meltdown. We conclude that a fundamental restructuring of the financial system, so as to reduce complexity and coupling, is required to avert future similar financial debacles. But we also conclude that such a restructuring faces significant obstacles, given the interests of powerful actors and the difficulties of labeling those responsible for the meltdown as wrongdoers.

Social scientists have long been interested in how political institutions affect economic performance. Nowhere are these effects more apparent today than in the current U.S. financial meltdown. This article offers an analysis of the meltdown by showing how government regulation among other things helped cause it. Specifically, the article shows how regulatory reforms closely associated with neoliberalism created perverse incentives that contributed significantly to the increased lending in the mortgage market and increased speculation in other financial markets even as such behavior was becoming increasingly risky. The result was the failure of mortgage firms, banks, a major insurance company, and eventually the market for short-term business loans, which triggered a general liquidity crisis thereby thrusting the entire economy into a severe recession. Implications for future research are explored. The article also offers a few policy prescriptions and an assessment of their political viability going forward.

This volume includes two major explanations of the meltdown that I critically discuss. The first is a “normal accident theory” arguing that the complexity and coupling of the financial system caused the failure. Although these structural characteristics were evident, I argue that the case does not fit the theory because the cause was not the system, but behavior by key agents who were aware of the great risks they were exposing their firms, clients, and society to. The second interpretation is a neoinstitutional one, emphasizing that ideologies, worldviews, cognitive frames, mimicry, and norms were the source of behaviors that turned out to be disastrous for the elites and others. The implication is that elites were victims, not perpetrators. I argue that while ideologies, etc., can have real effects on the behavior of many firm members and society in general, in this case financial elites, to serve personal ends, crafted the ideologies and changed institutions, fully aware that this could harm their firms, clients, and the public. Complexity and coupling only made deception easier and the consequences more extensive. For anecdotal evidence I examine a decade of deregulation, examples of elected representative, regulatory officials, firms, and the plentiful warnings.

This paper aims to examine the influence of neoliberalist deregulation on the rash of demutualisations of the 1990s. It explores the extent to which the demutualisation of two building societies – Northern Rock and Bradford & Bingley – and their subsequent demise in the wake of the credit crunch exemplify key features of the neoliberalist experiment, with a particular focus on their post‐mutualisation business models.

The analysis draws on literature that examines the neoliberal development of the financial sector and examines the media coverage of the financial crisis of 2007/2008 to study the discursive and material conditions of possibility for the development and implosion of the business models used by Northern Rock and Bradford & Bingley.

The paper argues that the demutualisation of Northern Rock and Bradford & Bingley was part of a broader neoliberal movement which had processes of financialisation at its centre. By converting into banks, former building societies gained greater access to wholesale borrowing, to new types of investors and to the unrestricted use of financial instruments such as securitisation. The collapse of Northern Rock and Bradford & Bingley is interpreted in the light of their access to these new sources of funding and their use of financial instruments which were either unavailable for, or antithetical to, the operation of mutual societies.

The paper comments on the contemporary features and current effects of the 2007/2008 crisis of liquidity, whose full long‐term consequences are uncertain. Further research and future events may offer confirmation or serve to qualify or correct its central argument. The intent of the paper is to provide a detailed analysis of the conditions and consequences of building society demutualisation in the context of the neoliberal expansion of the financial sector that resulted in a financial meltdown. It is hoped that this study will stimulate more critical analysis of the financial sector, and of the significance of financialisation more specifically.

The paper adopts an alternative perspective on the so‐called “subprime crisis”. The collapse of Northern Rock and Bradford & Bingley is understood in relation to the expansion, and subsequent crisis, of financialisation, in which financial instruments such as collateralized debt obligations and credit default swaps were at its explosive centre, rather than to the expansion of subprime lending per se. Demutualisation is presented as a symptom of neoliberalism, a development that, in the UK, is seen to have contributed significantly to the financial meltdown.

The purpose of this paper is to provide an historical perspective to help understand the forces that resulted in the Sarbanes‐Oxley Act. It aims to provide an historical vindication of the taxonomy developed by Charles Conrad in 2003.

The paper applies a framework developed by Charles Conrad in 2003 to explain the events that led to the corporate meltdown in 2002‐2003 and compare it to a similar scandal in the insurance industry at the beginning of the twentieth century.

A number of parallels were found between the two incidents. Additionally, the framework developed by Charles Conrad in 2003 was vindicated by the historical comparison. Lessons for practicing managers, domestic and international, are presented along with avenues for possible future research.

Recent changes in the political landscape, particularly in the USA, may indicate that Sarbanes‐Oxley will, indeed, be with us for a longer, rather shorter time. However, the real lesson for managers and scholars of management may be to concentrate on the three trends that foreshadow scandals and meltdowns to prevent similar problems, with their inevitable legal backlash in the future.

This paper uses the framework developed by Charles Conrad in 2003 to explore to different corporate meltdowns separated by a century in the USA. Lessons learned from these incidents as well as a perspective on the probable effective life of the Sarbanes‐Oxley Act are suggested.

This research chapter argues lawyers, not just bankers, for good and bad have been involved in all aspects of the current financial crisis. Indeed after examining and assessing various civil causes of action related to the “Mortgage Meltdown” and its aftermath, it appears if lawyers had been less involved or had raised warnings about legal risks as well as economic ones, whether the financial impact would have been so disastrous and widespread. Indeed by raising cautionary flags earlier, lawyers might have better served both the clients’ and the public's long-term interests. This view thus complements issues related to criminally prosecuting mortgage fraud that has also seen explosive growth and where lawyers have again played central roles. Lawyers have been involved at the back end too in terms of legislation or resolving issues such as bankruptcies and foreclosures.

The chapter examines several causes of action the media have reported being raised by various parties and how they illustrate the role lawyers, regulations, and legislation have played in the origins and evolution of the current crisis. The cases explored involve individual parties and class actions. The chapter also analyzes in detail a case representing opposite ends of the origination and foreclosure closure spectrum by describing a derivative shareholder suit against corporate officers and directors actively involved in creating the subprime mess, who were then sued for covering up the inevitable results from failed loans in the reports to shareholders. It thus illustrates the legal complexities emerging from the abuse of complex financial and organizational structures impacting many investors. Finally the chapter concludes by arguing there is a public policy need not only for financial regulatory reform but also for a tightening in the professional standards and regulatory penalties imposed on lawyers involved in such transactions.

The purpose of this paper is to analyze public trust during the aftermath of technological and hybrid natural-technological/natech disasters – Hurricane Katrina (2005) and the Fukushima Daiichi nuclear meltdown in Japan (2011). The work identifies common themes, actions and inactivity that can lead to citizens distrusting the government after disasters.

News reports from the two areas leading newspapers formed the body of the Hurricane Katrina and the Fukushima Daiichi nuclear meltdown case studies. Of key interest were emerging themes of trust and/or distrust during the immediate impact phase of the disaster in addition to government failures and social breakdowns resulting in a loss of trust in government institutions and individual leaders.

The series of examples illustrate how specific action or in-action by local and federal governments served as a catalyst for a loss of trust in government institutions and individual leaders in government while proposing potential strategies to help public leaders reduce distrust during times of crisis.

The two limitations were the use of only newspapers and the passage of a new law in 2013, the “Specially Designated Secrets Protection Law,” designed to limit news reporting of the press in Japan on the issue of nuclear radiation exposure of the general public in Japan, some of the new data are not available.

The research concludes by offering specific ways to regain trust after a perception of failure during pre- and post-disaster management in the age of mega disasters. The paper lists several recommendations that can be practically implemented to develop a culture of transparent communication, civic engagement in planning processes and inspire trust among stakeholders.

While the paper identifies barriers to establishing trust among government agencies, the citizenry and private industry, it seeks to help inform policy frameworks regarding the importance of the government’s ability to sustain a strong sense of trust that engenders civic participation in preserving or regaining trust in the aftermath of disasters.

Our volume is comprised of six sections: (1) the crisis; (2) its similarities to, and differences from being a “normal accident;” (3) sociological and historical explanations for the meltdown; (4) analyses of comparable speculative bubbles and business cycles; (5) international parallels and consequences; (6) analysis of how we might approach the future development of society and economy; and also a section of postscripts for looking ahead to future policy and prevention. Each contribution addresses its main topic, and concludes with practical policy recommendations for a better future.

I look forward to hearing your presentations of your papers. And, perhaps even more importantly, learning and obtaining new insights from subsequent interaction. As our Austrian School forbears stated, our knowledge as individuals is very limited and all of us will often make mistakes. The increased expertise has not improved this – it may be harder now as each expert knows more and more but about less and less as his field becomes ever more concentrated and thereby shrinks.Yet by our interaction, usually in some form of competition, our varying expertise, differing knowledge and individual approaches will get the total closer to right over time. We’ll approach equilibrium but of course never quite get there since nothing stands still and the world itself is constantly changing.I have always been fascinated by that miracle in which competing entrepreneurs produce an outcome that is more efficient and better than most would have done individually and look forward to obtaining greater insights as you present your papers.We last met in the fall of 2008, a period of rapid financial meltdown and severity of stress none of us had ever experienced. Of course the last similar crisis took place nearly 80 years ago in the 1930s, long before any of us were born. And in that distant past, there were two main suggestions of how to fix it: the Austrian approach and that of J. M. Keynes. Part of the latter's solution was applied then, and again this time.We asked the attendees, most of whom are represented by the papers in this volume, for comments or suggestions: What would you do now?We spent an hour in this discussion and, I believe:1) recognized that the Austrian School approach would be to allow interest rates to revert to normal levels from the artificially low yields which had misled entrepreneurs in the first place, but 2) accepted the reality that today's politicians had to take action and be seen as doing so.Three weeks earlier I had attended two days of meetings of the Hayek Society in Vienna. Along with some academics, the majority of the members consisted of business men, lawyers, practicing economists, psychologists and even politicians including the two Mr. Pauls from the US (Representative Ron Paul by video call). To my surprise, the consensus appeared to be to let business work out its own problems because no person, not even an expert, can know the future and therefore a perfect solution.It appears that the massive infusions of cash by all governments really have shortened the duration of our global problems. We must be grateful, but we also still need a long-term solution. As I said then and repeat now, giving a drunk some more drinks the morning after makes his hangover more bearable, but we still need to find out how to wean him off excessive alcohol. Our governments have spent, and in most cases are continuing to spend much more money to get us past the meltdown. But this money will need to be repaid by future spending cuts. And we are still living with abnormally low interest rates which will at some point mislead entrepreneurs into risky ventures with inadequate returns. We are building the next bubble.While no one knows exactly what we should do, I expect that the insights and views on expertise presented here, may help to clarify this challenge.