Financial meltdown as normal accident: The case of the American savings and loan industry

Abstract

This essay examines the recent financial disaster involving savings and loan institutions in the United States. The model of normal accidents, which attributes organizational disasters to the intersection of tight coupling and complexity, is used to illuminate aspects of the crisis. The neo-institutional perspective, stressing the role of three organized actors: the accounting profession, the state, and the organizations themselves, is used to understand why complexity and tight coupling increased simultaneously.