Money, Banks and Finance in Economic Thought

Debates and Controversies about the Nationalization of the Banking System: The French Regulation Crisis (1981-1986)

Gautier Johanna, IHEID

On February 11th, 1982, the French Parliament voted the Nationalization Law that fully nationalized 39 banks and two financial houses, and transferred the shares of the shareholders of the Banque Nationale de Paris, the Crédit Lyonnais, and the Société générale to the State (law n° 82-155, art. 12 and 29). This measure had been announced in the “Common Program” signed by the Socialist Party, the Communist Party, and the centrist Radical Movement of the Left (1972) that contributed to the election of President François Mitterrand (1981). At first, the Senate rejected the law proposal, labeling the text an “inadmissible” statement. Then, the parliamentary opposition tried to wreck the negotiating process by moving 1400 amendments to the motion. From October 13th, 1981 to February 1982, a series of debates thus opened a discussion between the National Assembly, the Senate, and the Constitutional Council about the regulation of the banking sector. These debates, accessible through the archives of the National Assembly or thanks to the publications of the Journal Officiel de la République Française, reveal an economic epistemological opposition beyond political ideologies. Years later, Jacques Attali, former Chief Economic Adviser of the President, and one of the central actors of this reform advocated that most of the French banking institutions needed the intervention of the State to “socialize losses and privatize profits.” Such a claim reminds us of the Troubled Asset Relief Program (TARP) of 2008 when U.S. Treasury bailed out banks and insurers after the crisis. Known as “lemon socialism,” “devil’s socialism,” or “socialism for the rich and capitalism for the poor,” this approach of State interventionism has been little debated in economic theories. What was its impact on the long-term economy? In 1986, the Right wing won the elections back and orchestrated an unprecedented wave of privatizations that urged the reform of the Bourse de Paris, then unable to cope with the trading volume. The future President of the European Central Bank, Jean-Claude Trichet, participated in this reform, and finally interpreted this whole regulation crisis as an original illustration of the Schumpeterian “creative destruction.” We shall address this problem through the analysis of original archival documents, and interviews conducted with key actors, put in perspective with the economists’ debates about the efficiency of the reforms.


Keywords: banking regulation, nationalization, privatization, lemon socialism

Paper file