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The Christian Faith and the Financial Crisis
Part Two: The Financial Crisis (2)


I have had from the start a very crude and simple idea of what the financial crisis was about. In 1929/30 in North America there was 'the Great Crash' - a financial crisis of enormous proportions followed by a long period of depression in the economy. As a result legislation was introduced to prevent a recurrence, most famously the 'Glass-Steagall Act' of 1933 which - among much else - separated the roles of the ordinary high street deposit bank from the investment banking sector, which aimed to raise money for investment purposes by engaging in more risky speculative adventures. A long period followed in which - though one could hardly suggest there weren't any political crises, or that the pattern of boom and bust had been overcome - there was no major stock exchange crash in any way comparable to the Great Crash of 1929. But in October 1986, under the government of Margaret Thatcher, we had the so-called 'Big Bang' deregulation of the financial services industry in the City of London. Overnight it became possible to do things in London that were illegal elsewhere in the world, notably in the United States. As a result many international companies opened shop in London, very noticeably Goldman Sachs; and, though the older British banking companies, with their less dynamic way of doing business, suffered badly, London, which had been trailing behind in the financial services industry, rapidly took the lead, overtaking Wall Street. (1) As a result the US government came under very heavy pressure to deregulate and Glass-Steagall itself was finally repealed by the Clinton administration in 1999. Since the legislation had been introduced to prevent a major financial crash such as had occurred in 1929/30 it seemed reasonable to conclude that the removal of the legislation had something to do with the major financial crash that occurred in 2007/8.

(1) See e.g. Danny Fortson: 'The day Big Bang blasted the old boys into oblivion', Sunday Independent, Sunday, 29 October 2006 - 'Out went parochialism and long lunches at the club; in came American banks, electronic trading and the cut-throat competitive ethos that has put London at the heart of international finance.' Available at Also, for a post financial crisis view: Heather Stewart and Simon Goodley: 'Big Bang's shockwaves left us with today's big bust', The Observer, Sunday 9 October 2011, available at

When I went (with Geoffrey Marshall, Dean of Brecon cathedral) to hear Brian Griffiths in Swansea I did not know what an important role he personally had played in the process of deregulation. By the time it occurred, of course, he was already head of the Number 10 Policy Unit but even beforehand the archive that is available on the website of the Margaret Thatcher Foundation includes a number of memos and recommendations from him already pushing in this direction and there is further similar material in Charles Moore's authorised biography of Margaret Thatcher. We will probably learn much more once the second volume appears.

Throughout the 1970s Griffiths was involved with the Institute of Economic Affairs, which could be described as a 'think tank' - in the days before that term became widely used - set up to promote the free market ideas associated with the names of Friedrich Hayek and Milton Friedman in the University of Chicago. Hayek had been a lecturer in the London School of Economics in the 1930s and Griffiths was a lecturer there from 1965 to 1975, so I think a brief look at the history of the LSE might be useful.