ABSTRACT
This chapter presents a theoretical framework that centers on an element that existing explanations of regulatory reforms have largely neglected, namely: how have diffuse interests come to be strongly represented in the regulatory reform process spurred by the crisis, despite the greater resources mobilized by the financial sector? It summarizes how it was possible for putatively weak and diffuse interest groups to push for policy change, even under the difficult conditions posed by financial regulation. In the case of the European Union (EU) financial transaction tax, the legislative proposal made it to the policy agenda due to key member state governments, as well as MEPs pushing for reform along with the preferences of a newly mobilized civil society coalition. The chapter concludes that regulatory reforms promoting a diffuse public interest over a narrow financial sector interest occurred for the following main reasons, applicable to the positive and mixed cases examined: post-crisis context and favorable political opportunities.
