Very much so. You know, we got into this problem, apparently because we did not have effective enforcement of antitrust policies, and we wound up with institutions that were too big to fail. And we know when you have institutions that are too big to fail, that they—there’s a real risk of their engaging in excessive risk-taking, because they know, you know, they get to take the profits when things turn out well, and Wall Street really did take those profits in recent years, but when the losses come up, they know that we’re going to bail them out, which we are in the process of doing. So, this is predictable. And when you have too big to fail, the problems are getting worse and worse. So, as we solve this problem, we are actually creating—exacerbating the potential for future problems.
In addition to that, the likelihood—you know, what makes the market economy work is vibrant competition. Already, the financial sector has been accused, and I think correctly, of engaging in non-competitive practices. And you see it in the credit card fees, which are far above competitive—equilibrium levels. That’s why they, you know, have been able to generate such profits from a very simple technology. And so, we know that they’re already engaging in anti-competitive practices. Now you have this additional concentration, the risk of this non-competitive behavior just increases all the more.
One other point I wanted to make about—going back to the S&L crisis, that’s important to take and bear in mind, the S&L crisis, I think, led very directly to the recession that came a couple years later, the ’90, ’91, ’92, that lasted until ’93, late ’93, beginning ’94. What we should be anticipating is that, in fact, no matter what plan we put forward, there will be a credit contraction. Already, states and localities are facing a shortfall of revenue, and they’re cutting back on expenditures; big weaknesses in balance sheets at firms; and households have been hurt by the problems that we’ve been having. So, we can expect the economic downturn that we’ve already been experiencing, the fact that no jobs have been created this year—we should expect that to get worse under the best of plans. And the problem is, this is not the best of plans.