Toward a conceptual framework of leaders' impression management strategies during the process of financial crisis: the story of the repeal of the Glass-Steagall Act

Abstract

In recent decades nations around the world have experienced financial crisis. In some cases political leaders have contributed to the suddenness and magnitude of the crisis by initially providing overly optimistic assertions concerning the potential benefits of their financial liberalisation programmes, but subsequently denying the possibility of crisis as economic imbalances appeared. Given this tendency, in this article we develop an initial framework which depicts how, based on a political ideology, nations’ political leaders initially use impression management strategies to define and legitimise an economic/financial programme and again use impression management to defend the programme when crisis arises. The framework examines how impression management evolves during the chronological process of financial crisis as well as how leaders’ political ideology and impression management strategies legitimise and determine the impression management strategies of actors at ‘lower’ levels of the financial system such as regulators, bankers, and banks’ monitors (e.g., appraisals, credit raters, accountants/auditors). The framework is applied to statements made by US political leaders, regulators, and banking executives during a period of US financial liberalisation (1998–1999, the repeal of the Glass Steagall Act), during the period (2003–2007) immediately preceding the recent financial crisis, and during the period (2008–present) of post-crisis reforms. The results, which closely follow the framework, are used to suggest the construction of a more balanced impression management approach (during all periods of crisis) which emphasises both the benefits and costs of financial liberalisation.