Thursday, March 19, 2009

Sherman Antitrust Act and AIG

I spoke to a good friend last night and he brought up a very good point that I haven't heard mentioned throughout this meltdown in our economy. Is it a good thing for banks to be merging? Bank of America keeps getting larger as is swallows financial institutions throughout our economy. Why was a company like AIG allowed to become so large, that it could not fail?

Remember when the Government broke apart AT&T because of that company's control of the communications industry? In 1982, the U.S. Government took that drastic step. Today it seems like the Obama administration is doing everything it can to keep AIG whole. I have not heard discussions that connect the Sherman Antitrust Act to the situation with AIG. Why not?

As time goes on, mergers throughout our economy are severely limiting competition in the marketplace. We have far fewer oil companies today than existed 20 years ago because of mergers in the industry. I've heard some talk about the necessity of mergers between the big three automakers. Seems like this just may make the situation far worse. Government policy should not lead to building larger more unmanageable companies.

The Justice Department has an Antitrust Division. What's been going on here? The world did not end with the dismantling of AT&T. I don't think that breaking apart AIG will end capitalism as we know it. It might be the best thing. Something tells me that we also can't afford to have banks that are too big to fail. Maybe if the Justice Department focused its attention on this issue, we wouldn't have to deal with today's bailout of companies that simply can not fail.

I've got to thank my friend for the conversation we had last night. There's a lot of food for thought here.


1 comment:

  1. How do you think a company will conduct it's business if it knows that it will be propped up by the government? It's not good to be too big to let fail. It's like one company doing the bulk of it's business with one large customer. If that customer fails, the company doing business with it will probably go under. I agree that AIG should be broken up into smaller companies.