AllGov news, reported Thursday that Goldman and JP Morgan were among 17 investment banks sued in 1947 for collusion in setting rates, acting like a cartel, in Investment Banking Cartel More Concentrated than Ever, Drops to 5, and that their method of eliminating competition has reduced that 17 down to 5. The move now, it seems, is not to pay off the politicians and government officials and regulators, but actually to become the regulators. As the latest example, there is “Obama’s” new Chief of Staff, Jacob Lew. Says AllGov in a synopsis of William Cohan’s original article:
“Where once there were 17 major investment banks on Wall Street, there now are only five.
“During the financial crisis, stalwarts such as Bear Stearns, Lehman Brothers Holdings Inc. and Merrill Lynch crumbled, leaving behind Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America and Deutsche Bank AG in command of investment banking.
“These Big 5 act a lot like a cartel, according to William Cohan, a former investment banker and columnist for Bloomberg. In fact, investment banks have been operating like a cartel for a long time.
“In 1947 the U.S. government sued Morgan Stanley, Goldman Sachs and 16 other Wall Street investment banks, claiming the banks were violating antitrust laws by colluding to set prices for their services. The lawsuit was finally dismissed in 1953 when Judge Harold Medina ruled that evidence of collusion was only ‘circumstantial,’ leaving the banks to continue their antitrust behavior.
“Now, 59 years later, the number of major players in the investment banking industry is so reduced that the 17 of the old days seems positively competitive in comparison.
“Cohan urges the Obama administration to go after the five institutions dominating investment banking, ‘break up the Wall Street cartel and re-establish the integrity of the capital markets.’”
-Noel Brinkerhoff, David Wallechinsky
How Wall Street Turned a Crisis Into a Cartel (by William Cohan, Bloomberg)