Sunday, October 12, 2008

Flashback: How Washington Helped Decapitalize the Banking Industry

Do you remember way back in 2005 when Walmart tried to enter the banking industry? They ran into one little problem: the Washington buzz-saw operated by banking industry incumbents to create barriers to entry. You do not have to believe my version of the story: just read it at Business Week or MSN.com, among other places.

Do you think the banking industry would be poorly capitalized today if Walmart were a major player?

Do you think Treasury policies today will suddenly reverse this course? At least ONE economist needs to join me in reminding the public of the virtues of free entry.

2 comments:

Don said...

Actually, your point might be important now, in that we would seem to be left with fewer banks. As well, we have to hope that the government will disinvest from the banks they invest in, and there might be a way to encourage more banking competition in that eventuality. I'm not competent to know. Don the libertarian Democrat

BrianH said...

You are not alone. See here for a similar call.