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Too Big... and Failing


#1

Too Big... and Failing

Sarah Anderson

Bart Naylor likes to joke that when he accepted a job as a Wall Street lobbyist, he assumed he’d be making a big fat salary.

Seven-digit paychecks have indeed become the norm. The three top lobbyists for the Securities Industry and Financial Markets Association, for example, each made in excess of $1 million in 2014. The head of the Financial Services Roundtable made more than $2.4 million.


#3

Dodd-Frank made community banks less competitive with the too-big-to-fail TBTF banks resulting in the five TBTF banks now controlling nearly 50% of US bank assets compared to 25% when they crashed the economy in 2008.

With Clinton or Trump likely to occupy the White House next year the TBTF banks will continue grow as they drive community banks out of business.

Obamacare enabled insurance companies to engage in larger mergers (Cigna / Anthem being the most recent) creating TBTF insurance compnies. The drug companies have not been far behind insurance companies in merging themselves into TBTF companies.


#4

Over in the Austrian Economist and Public Choice Theory direction, you will get some, some, agreement. The tendency of government regulation is to drive out small companies and drive the industry into 'consolidation' and 'oligopolization'. Maybe it's because the regulators like having a smaller work load, fewer companies to look at. Maybe it's because of mutual corruption: that the companies have to spend money to try and limit the 'damage' caused by regulation, and that the political masters of the regulators like getting corrupt money in order to corrupt elections and stay in power.