Tuesday, March 30, 2010

Should We Break Up the Big Banks?

Jeffrey Rogers Hummel sends along a link to his post on the next focus of the Obama interventionists, the financial sector. Hummel makes some much needed observations to put things into perspective. Here's a tatse:
Now that Congress and the Obama Administration have succeeded in making U.S. health care even worse than it was before--which result, when it becomes evident over the next few years, will simply become an excuse for still more counter-productive, government intervention--they will no doubt set their sights on "reforming" the financial system. One idea that has appealed even to some market advocates is breaking up the big banks. Doing so would allegedly undermine "too big too fail" both directly and indirectly, by reducing the political clout of large institutions.

So I was intrigued to notice that the most recent, 2010 edition of Frederic S. Mishkin's standard money and banking text, The Economics of Money, Banking & Financial Markets, observes that, despite the increased consolidation of the U.S. banking industry over the last twenty-five years, it still remains the least concentrated in the developed world.
The full commentary is here.

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