The New Antitrust – For Banks

Just over a hundred years ago, the United States led the world in terms of rethinking how big business worked – and when the power of such firms should be constrained. In retrospect, the breakthrough legislation – not just for the US, but also internationally – was the Sherman Antitrust Act of 1890.

The Dodd-Frank Financial Reform Bill, which is about to pass the US Senate, does something similar – and long overdue – for banking.

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13 responses to “The New Antitrust – For Banks

  1. There are three ways this might play out.

    One, we follow in the spirit of TR, and the Kanjorski Amendment actually gets applied.

    Two, the Kanjorski Amendment never gets applied.

    Ot three, it does get applied — or comes close — and promptly gets repealed.

    My estimate for the probabilities of these are 0%, 70%, and 30%, respectively.

  2. Big deal. It’s all about appearances. You make scores of smaller banks look small and independent. The Octopus Principle. Pulpo Nazism.

  3. After all of Simon’s good talk about breaking up the banks being one of the necessary components, in the end he was going to magically discover a way to declare the fraudulent bill to be victory anyway?

    On its face it’s ridiculous to think the Kanjorski amendment slipped through by stealth. These are the same bankster lobbyists who were so satisfied they had gutted everything which could possibly be of substance that they even found energy to go after the sham “Volcker rule”.

    The Kanjorski amendment, like any other version of sham “resolution authority” or discretionary pre-emptive authority, will simply never be used even if it really does theoretically bestow worthwhile authority.

    We already have the PCA Law. We know what happened with it: Nothing. What rational person could really think “This time it’ll be different!”

    And according to this:

    http://www.creditwritedowns.com/2009/11/the-kanjorski-amendment-trojan-horse-and-prompt-corrective-action.html

    the real nature of the Kanjorski amendment is to actually obstruct already existing FDIC powers, by letting banks targeted for receivership take the FDIC to court. If that’s accurate, then the point is clearly to force even more bailouts in a crisis, since how could there be time to hash everything out in the often corrupt courts?

    The whole bill is a fraud and must be rejected by all real anti-gangsterists and anti-corporatists. The urge to discover (i.e. invent) some pearl in the mud which miraculously redeems the whole thing is the path of delusion, or of astroturfing.

  4. Looks like a gift to the legal profession as well.

  5. In the spirit of critical thinking and challenge….

    “What is Simon Johnson Smoking?”
    http://www.nakedcapitalism.com/2010/07/what-is-simon-johnson-smoking.html

    “Simon Johnson deserves tons of kudos for pointing out that the US is in the hands of financial oligarchs, via his celebrated Atlantic article, “The Quiet Coup.” But having recognized a clear and present danger, he seems peculiarly willing to confuse non-solutions with meaningful measures. In an article at Project Syndicate, he incorrectly celebrates a toothless provision in the Dodd-Frank bill as being tantamount to an anti-trust act for too big to fail banks”

  6. Hmmm – probably should have read the article first… The normally heroically great Yves Smith appears to be taking the “silver bullet straw man” critique here, which, paraphrased, goes something like this:

    “Here are the reasons why your proposal is not sufficient alone in solving the problem (e.g. some small banks are also TBTF!), implying we should ignore your proposal”

    A variant favoured by banks and some economists is “we can’t accurately measure TBTF/define thresholds [true] so let’s ignore these imperfect solutions.” Given the alternative – sticking with what we’ve got, buying gold, a shelter and a vegetable patch, and hanging on tight etc. – these arguments seem fatuous.

  7. “Like”

  8. Was the purpose of the bill to deal with TBTF’s in a timely fashion or an Exxon Valdez twenty year fashion?

  9. Oh come on.

    The bill is better than nothing (I gave it a C- after reading through it), but to compare it to the Sherman Antitrust Act is just ridiculous. This bill is a mere shell of what it SHOULD have been.

  10. Simon J Needs an Internship

    This is the problem when you are stuck as an academic. it is really difficult to see how the real world functions. more importantly, it is important for Johnson/Kwak to drag on this debate to drive book sales.

    “let me debate jamie dimon” is one way to retain populist rhetoric.

  11. Bayard Waterbury

    Yes, and the problem is the age-old one. Without a driving force (which, by the way, was seriously lacking during the financial reform process after the President indicated strongly that he would not be aggressive – of course he isn’t and won’t be when it works to his political detriment) behind the debates, we get what we expect (those who have learned the cynicism lesson hard taught us), which is a pure political solution without any intellectual integrity. I spent my life in the law. I know the difference between hard reality and posing. Good judges do too. They throw posturers out of their courtrooms. Blather has no place. Only the hard edge of intellect is respected. Sadly, we have almost none of that at the helm of our country.

    Nice that we now have a group of decision-makers who can identify problems and take action. I doubt, no matter how dire the circumstance, that they ever will. But that’s just me.

  12. “In reviewing the Council’s imposition of a mitigatory action, the court shall rescind or dismiss only those mitigatory actions it finds to be imposed in an arbitrary and capricious manner.”

    Do any of the commenters here have anything substantive or historical to tell about the “arbitrary and capricious” standard?

    Or is everyone just following the mood.

    I think it’s clear from all the “It’s a shell game!” and “It’s a sham!” and “It’s all smoke and mirrors!” type comments that nobody here understands much about what they are criticizing.

    So what if actions under the Kanjorski authority get delayed or bypassed: The underlying legislation allows Treasury to unleash the FDIC’s wolves any time they see fit. So, instead of complaining, why not just dare these companies to sue. In the court of public opinion, dare Treasury not to use the Kanjorski authority. Dare them all, commenters.

    Or, just admit it. Y’all are just hedging your ignorance with your wholesale condemnations and complaints.