Looks like Simon Johnson is advocating using the antitrust laws to limit the size of banks before members of Congress. I'm glad to see the aproach getting some attention. I agree with Mark Thoma that the laws would require some reform in order to apply -- this is about the intrinsic dangers of size rather than the anti-competitive dangers of size -- but I've been convinced since March that the antitrust rubric is the correct way to think about the issue. The basic principle, after all, should hold for both spheres. Antitrust law is concerned with the dangers that size poses to markets. It offers regulators a usable mechanism for breaking up corporations that grow too large and thus threaten continued competition -- which is to say, threaten the market's continued capacity to function. This crisis has taught us that size can endanger the very survival of the market through means that have nothing to do with noncompetitive behavior. But we're still dealing with the problems that result from too much "bigness," and that's fundamentally the sort of problem that antitrust laws were designed to address. And more broadly, explaining this in terms of antitrust conveys an important point: Regulating bigness is less of an ideologically alien task than some would suggest. We've been doing it, in fact, for a very long time.
