Document Type

Article

Publication Date

2-1-2024

Abstract

Money is power. Banks have the extraordinary power to create the nation’s money and credit, which they are entrusted to channel into productive economic uses. Like most other forms of economic power, this publicly granted privilege can be abused for private gain. That is why the “money monopoly” and “money trusts” were once considered one of the most dangerous forms of concentrated private wealth, an existential threat to economic freedom and American democracy. Yet, for the past half-century, the law governing banks and the law curbing monopolies have occupied doctrinally and normatively separate spaces. Today, banking law is seen predominantly as an instrument of ensuring banks’ “safety and soundness,” which only minimally overlaps with competition-focused antitrust law. This Essay offers a new understanding of banking law and its connection to antitrust. It argues that, contrary to the prevailing view, U.S. bank regulation operates as a comprehensive antimonopoly regime, designed to prevent excessive concentration of private power over the supply and allocation of money and credit in a democratic economy. The Essay shows how multiple provisions of banking law impose structural constraints on banks’ ability to abuse public subsidy and other government-granted powers and privileges. While often understood as serving purely prudential purposes, these statutes and regulations seek to protect America’s economy from potentially perilous competitive distortions and domination by concentrated financial interests. Reframing the core narrative of U.S. banking law around the issue of economic power in a democratic society has far-reaching implications. Embracing the embedded antimonopoly spirit of bank regulation can fundamentally reset policymakers’ priorities and expand their options. It can generate more effective and comprehensive solutions to some of today’s most pressing public policy challenges, from the continuing growth of “too big to fail” banks to the rise of crypto and digital platform-based finance.

Keywords

bank regulation, antitrust, antimonopoly, political economy, market power, public subsidy, safety and soundness, prudential regulation, bank merger, too big to fail, Brandeisian, structural regulation, Bank Holding Company Act, money trust, financial conglomerates, digital asset

Publication Title

Yale Law Journal

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