“We will be among the biggest beneficiaries of reform,” Goldman Sachs CEO Lloyd Blankfein said of the 2010 Dodd-Frank financial regulation bill, which was supposed to be a broadside to Wall Street.
Today, we get a hint how Goldman benefits: Regulations crowd out competitors, giving Goldman a bigger share of the regulated markets.
Here’s Bloomberg News on the commodities market:
‘The more banks that exit commodities trading, the less competitive it becomes for the banks which stick with it,’ Jeffery Harte, an analyst at Sandler O’Neill & Partners LP, said in a phone interview. Goldman Sachs has ‘the bigger franchise to be a winner. It now has a much bigger piece of a much smaller pie.'”
Some commodities regs are coming via Dodd-Frank.
Financial regulation protecting the big guys and causing consolidation is a pattern. Recall this from JPMorgan CEO Jamie Dimon:
Small banks fear the “Walmartization” of banking thanks to Dodd-Frank, the Columbia Business Times reported last year. The Investigative Reporting Workshop wrote earlier that financial regulation would drive consolidation in the industry.
Here was Michael Hirsch at Newsweek making the same point, citing a former Treasury official:
And the law may institutionalize bailouts, according to the WonkBlog report.
The law has its plusses and its minuses, but here’s a good question to ask: Is the economy more or less fragile with fewer, bigger players in the financial sector?
