Yet another bank is at the table looking for help from Uncle Sam: CitiGroup. It’s heartbreaking and angering.
As I was watching this segment of the CBS Evening News last night (something that puts me in league with septuagenarians, I know), I started thinking about the deregulation of the banking system. It’s not something I think much about, by the way, but deregulation has been blamed for part of the economic crisis.
My particular thought on this issue isn’t about deregulation so much as it is about oversight. I repeatedly hear the adjective “giant” used to modify these struggling firms: “banking giant,” “insurance giant,” “investment giant,” etc. These companies didn’t just get “giant” on their own. They got “giant” by buying up or merging not-so-much-smaller competitors. The key is that each merger or acquisition came with government approval.
I believe the focus of previous governmental reviews has been on one main issue: anti-trust; the idea that mega-mergers might create a monopoly, or near-monopoly, in certain markets. Usually, the anti-trust issue is skirted by forcing one or both of the firms to divest certain divisions, subsidiaries, or a percentage of branch offices.
That doesn’t address the overall issue of allowing companies to grow so large that their collapse could cripple the economy. That’s where we stand now, and we, the taxpayers, are being asked to rescue these companies.
Of course, this is America, and free-market capitalism reigns. I take no issue with that, but it has been proven over and over that laissez-faire policies only invite greed, abuse, and misuse.
My hope is that the lesson learned by regulators is this: that by allowing companies to grow and grow with only minor concessions of market share can lead us to near disaster, as we are now. Although I’m not advocating breaking up these companies, I believe there should be some kind of operating policy within the regulatory agencies that will insist upon closer scrutiny of mergers and acquisitons for reasons beyond anti-trust issues. I hope that the lesson learned is one of objectivity and sound decision. One can only hope.