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I agree, though as a matter of policy you have to ask - how do you actually "break them up"? On what basis? You can't just have the government ordering compan
by kgrin 17y ago
I agree, though as a matter of policy you have to ask - how do you actually "break them up"? On what basis? You can't just have the government ordering companies to break up.
Unlike, say, Standard Oil, antitrust laws don't apply here (the problem isn't antitrust, it's systemic risk). So either you need some new laws, or just have to ask very nicely (though as a matter of future policy, regulators can - and should - refuse to approve these financial mega-firm mergers).
I suppose the government could have played a game of chicken (as it did with GM): "do what we tell you (break yourself up into smaller pieces) or we'll let you go under"... but if we've demonstrated that we weren't willing to countenance these institutions going under at that particular point in time, I'm not sure how credible the threat would be.
- philwelch 17y agoYou'd need some sort of new law. And for it to work, you'd need a breakup to actually be in the interest of the shareholders. This shouldn't be hard, since owning stock in JP Morgan Chase is a worse deal than owning stock in 10 diversified smaller banks which you can freely mix and match with other stocks.
- anamax 17y ago> I agree, though as a matter of policy you have to ask - how do you actually "break them up"? On what basis? You can't just have the government ordering companies to break up. It's not clear that govt can't break them up now. Govt is technically the controlling entity for a large number of them. It can bring the question to the board and if the board votes for breakup.... With ordinary shareholders, there are laws protecting the minority on a fiduciary basis, but they don't apply to govts. Besides, one can reasonably argue that a breakup would increase shareholder value.