With this week's exceptional earnings reports by Goldman Sachs and JP Morgan Chase, it is now evident that the consolidation of financial power and leadership in American banking is complete. From the end of the Great Depression, the financial world was balkanized, with commercial banks and investment banks vying for supremacy. The repeal of Glass-Steagall and the subsequent creation of financial supermarkets like Citigroup and Merrill Lynch presaged a new world. Last September's panic has eliminated competition, transformed the marketplace and created the new duopoly of Goldman and Morgan.
So we enter an unprecedented time in finance with these surviving behemoths that are not only too big to fail, but may prove to be too big to regulate or control. Perhaps, in time, competition will appear from foreign banks or sovereign wealth funds. But for the foreseeable future, to find out what Wall Street thinks you only need to dial the phone twice...and time will tell if Goldman or Morgan will deign to return either call.
