Trust in the shadow banking system: ratings agencies and discursive power

The purpose of this paper is to consider a less visible form of trust production which led to the global financial crisis of 2007-2009. In many ways, the financial crisis was the first to result from a breakdown of assurance mechanisms, or generators of trust (Yandle, 2008). In other words, this particular global crisis was, at its core, a crisis of trust. What is also unique, though less adequately discussed, is that the global financial crisis was initially triggered not by a loss of public trust, but by an internal loss of trust between actors within the financial system itself. I refer specifically to the breakdown of trust between visible financial system and the ‘shadow’ financial system, the latter representing a sizeable portion of the system that is largely invisible to the public eye. For the purpose of this paper, I define organisations as “sites where members subject themselves and one another to various practices, where discourse sustains mutually reinforcing patterns of power and powerlessness” (Conrad and Haynes, 2001; 65). Power resides in these discursive practices, including the organisational knowledge formation and claims about it. In his discussion of trust in trans-organisational relations, Bachmann (2001), looks at the complex social processes involved in inter-firm relationships, and finds that firms operating within national boundaries have a shared world of institutional arrangements which govern the forms of trust relevant when engaging in specific relationships with each other