Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI releases banking, financial services recommendations for next President, (Jul 25, 2016)

By Greg Hammond, J.D.

The American Antitrust Institute (AAI) has released the entrepreneurship and innovation chapter of its Transition Report on Competition Policy to the 45th President of the United States, encouraging effective antitrust enforcement and regulation in the banking and financial services industry.

The release of the chapter, entitled "Banking & Financial Services: Globalization, Regulation, and Consolidation in a Troubled Industry," is the fifth in a series of previews of the forthcoming transition report available for download in advance of the November election. The AAI Presidential Transition Report makes policy recommendations based on the AAI’s mission of promoting competition that protects consumers, businesses, and society.

The banking and financial services chapter makes a number of recommendations to the next administration, including that:

• The Department of Justice Antitrust Division should vigorously and expansively apply available antitrust enforcement tools in reviewing future mergers involving large financial institutions, and that there needs to be further, flexible investigation and analysis concerning the potential anticompetitive effects of mergers involving large financial institutions;

• Antitrust enforcement agencies should pay closer attention to the adverse effects, such as the increased potential for collusion, produced by rising levels of concentration in national and international markets for financial products and services, including investment banking services;

• Senior bank executives who approve or allow antitrust violations should be subject to criminal or civil enforcement, and individual culpability should be punished more aggressively; and

• The Consumer Financial Protection Bureau’s (CFPB’s) proposed rule prohibiting providers of certain consumer financial products and services from imposing arbitration agreements that bar consumers from filing or participating in class actions should be adopted and enforced.

The AAI also suggests that Congress should require regulators to consult in a timely manner with the Justice Department on the economic and competitive implications of major structural changes in the banking and financial services industry. Further, regulatory efforts should focus on creating incentives for company-by-company decisions to divest activities and assets, according to the AAI, especially where size is likely to confer competitive advantages based on investor and lender beliefs that the government will prevent a disorderly failure of the company. If these incentives do not work, the AAI suggests that Congress give serious consideration to legislation that would require mandatory breakups of "Too Big to Fail" (TBTF) financial institutions or that would recreate a regime of functional separation similar to the Glass-Steagall Act of 1933.

The AAI is an independent, nonprofit organization devoted to promoting competition that protects consumers, businesses, and society. The Washington, D.C.-based organization serves the public through education, research, and advocacy on the benefits of competition and the use of antitrust enforcement as a vital component of national and international competition policy.

News: Antitrust