Perhaps you believe, as many people do, that the largest banks in the nation such as JP Morgan and Goldman Sachs should be broken up. They are simply “Too big to fail” and the cost of a bailout by taxpayers to avoid a systemic failure is too great. Who should break them up? The federal government, by legislation? The Federal Reserve, by regulation?
How about the free market – because they are not as profitable?
For all the shouting and consternation about big banks, one simple fact has gone overlooked. With their tremendous size and ability to “make the market”, as shown by the “London Whale” incident, they do not actually rule the world. They are about as profitable, and usually less so, than smaller banks. The reasons are not obvious but they are demonstrated. And those who should be doing the shouting are not the…
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