Notes on This Week’s Column: The Big Banks Get Bigger: The Balance Sheet : The New Yorker:
My column this week deals with the question of why the country’s biggest banks have gotten even bigger and more powerful as a result of the financial crisis. The simple answer is that the combination of a series of mergers in the industry and the disappearance of competitors like Lehman left those institutions that were still standing in much better shape than before. One way the government tried to stabilize the financial system was by allowing (or, in some cases, encouraging) bigger banks to take over their weaker brethren, with JPMorgan acquiring Washington Mutual and Bear Stearns, Wells Fargo acquiring Wachovia, and Bank of America merging with Merrill Lynch. In effect, we’ve made institutions that were already too big to fail even bigger.