Saule Omarova is Beth and Marc Goldberg Professor of Law at Cornell University and Sidley Austin-Robert D. McLean Visiting Professor of Law at Yale University, and Graham Steele is the Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury. This post is based on their forthcoming article in the Yale Law Journal.
There is a curious tension between antitrust law and U.S. bank regulation, as currently practiced. While banks are not technically exempt from antitrust enforcement, they are generally seen as inhabiting an alternative regulatory universe that is governed by principles and prioritizes substantive goals different from antitrust’s traditional competition-related concerns. This de facto exception came into a sharp relief during the Global Financial Crisis of 2007-09. To stabilize the financial system, regulators rapidly approved emergency mergers and acquisitions and took other measures that dramatically increased the level of concentration in the U.S. banking sector. The post-crisis effort to ensure the stability of these new behemoths was subsequently truncated by regulatory “tailoring” that relaxed many of the new rules to fit banks’ business needs, ostensibly to preserve their competitiveness. As the memories of the crisis faded away, the banking sector remained largely untouched by the recent antitrust turn in American politics and academia. The latest banking mini-crisis, triggered by the failures of Silicon Valley Bank (SVB) and Signature Bank in the spring of 2023, brought this dynamic back into public view. This latest episode not only replayed the familiar scenario—emergency takeovers and further growth of large banking conglomerates—but also unleashed public calls to further liberalize federal bank merger policy.