Preserving Competition After the Banking Meltdown

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Albert A. Foer, Dec 15, 2008

The Great Banking Meltdown of 2008, which may yet metastasize into the Even Greater Depression, has already resulted in an unprecedented rearrangement of the financial services sector. Merrill Lynch and Countrywide Financial are now part of the Bank of America; Bear Stearns and Washington Mutual are now part of JPMorgan Chase; and Wachovia is now part of Wells Fargo. Goldman Sachs, Morgan Stanley, and American Express have become bank holding companies. Who knows what comes next? We seem to be moving at warp speed toward a highly concentrated system of capital allocation dominated by conglomerated financial services firms which will likely have substantial political as well as economic clout. This essay offers some thoughts on the implications of the sea change in the U.S. financial industry in terms of domestic and international competition and the transformed role of domestic and international regulation.

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