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Financial Regulation and the Current Crisis: A Guide for the Antitrust Community

62 Pages Posted: 1 Jul 2009  

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

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Date Written: June 11, 2009

Abstract

The U.S. financial crisis of 2007-2008 has been a searing experience. The popping of a housing bubble exposed the subprime lending debacle, which in turn created a wider financial crisis. In its response to this crisis, the federal government has provided financial assistance to a number of financial institutions that are often described as 'too big to fail' (TBTF) – which, to those who associate antitrust with size, seems to bring antitrust potentially into the picture. This paper will offer a guide to the antitrust community that will cover the U.S. financial sector, financial regulation, and the debacle and subsequent financial crisis. The tensions that can arise between financial regulation and antitrust will be highlighted. TBTF is not one of them, however, because TBTF is about size and interconnectedness, but not about competition and market power. Although much progress has been made in removing anticompetitive elements from financial regulation over the past three to four decades, there are still important advances that can be made. The paper concludes by offering a set of policy recommendations for the removal of some of the important remaining elements of financial regulation that impede competition.

Keywords: competition, antitrust, housing crisis, too big to fail, financial regulation

Suggested Citation

White, Lawrence J., Financial Regulation and the Current Crisis: A Guide for the Antitrust Community (June 11, 2009). Available at SSRN: https://ssrn.com/abstract=1426188 or http://dx.doi.org/10.2139/ssrn.1426188

Lawrence J. White (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics ( email )

44 West 4th Street
New York, NY NY 10012
United States

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