This is what a failure by government to properly regulate and intervene in the “marketplace’ inevitably creates, my friends:
Several of the nation’s biggest banks have failed or been absorbed by healthier institutions, leaving three giant “superbanks” with an unprecedented concentration of market power: Bank of America, JPMorgan Chase and Wells Fargo.
While that may be good news for emerging giants and the failing companies they helped rescue, the new oligopoly raises troubling questions about regulation and competition, analysts and consumer advocates say.
“Bank fees are going up, up, up, and that’s the danger to consumers as more of these banks consolidate,” says Sally Greenberg, executive director of the National Consumer League. “It’s difficult for the average person to get a bank account that doesn’t involve fees, and if you get into financial distress you’re cooked, and you’ll be ‘fee-ed’ to death.” […]
“Consumers are going to be victims of higher and more punitive fees,” Greenberg predicts.
Moreover, many analysts worry about how federal and state authorities, who were unable to prevent the current financial industry meltdown, will be able to monitor the new giant banks that combine a wide range of operations from investment banking to consumer lending.
“Large institutions are impossible to manage prudently, let alone regulate,” says Amar Bhide, a professor at the Columbia Business School.
In the old days, a Progressive Republican by the name of Teddy Roosevelt railed against just such consolidations and monopolies of wealth and power. He saw them as a threat to small businessmen and entrepreneurs who would be starved of capital and kept out of entering the marketplace by those who dominated the field. Which was why he promoted the policy of trust busting, and helped pass the first antitrust legislation in this country.
Teddy Roosevelt would think us all fools, but especially the free marketeers of the modern Republican party for allowing the Lords of Wall Street to pull the wool over their eyes once again. History has many lessons. few people study it anymore, however. They prefer the simpler fantasies of ideology and faith based economic theory. Let’s us hope President elect Obama has read (or intends to study) a few cogent histories of the “Gilded Age,” because I believe they would come in quite handy about now.
Monopolies and oligopolies are inherently unstable. They become incestuous, rigid and inflexible, predatory and prone to failure. They have no brakes, as we learned from the recent massive collapse among the large investment firms of Wall Street, and why should they? They are protected and coddled by government, allowed to bloat like fat spiders on our economy, sucking the lifeblood out of any possible economic revival. They have no purpose other than to perpetuate their own power and the greed of their managers. They are, to borrow a phrase from that inimitable wordsmith, George Bush, a catastrophic success, years in the making by Republican and conservative policies which led to the mismanagement of the banking and financial sector of our economy.
If we let them stay as they are, we are allowing the growth of parasites that will eventually kill us, their hosts, and the futures of our children with them. The time to take action to break them up into manageable and competitive enterprises is sooner, rather than later. Otherwise we will see another wave of corporate socialism in the near future which will make the current mess seem like a child’s birthday party by comparison.
