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regulations?

Greyparrot
Posts: 14,249
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4/1/2013 12:10:02 PM
Posted: 3 years ago
Assuming regulations impose barriers of entry into the market, do regulations cause more monopolies or near monopolies than deregulation?
medv4380
Posts: 200
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4/1/2013 2:47:20 PM
Posted: 3 years ago
If your assumptions are true, how do you explain the deregulation of the banks in the 90's which appears to have resulted in fewer banks and financial institutions overall?
Cermank
Posts: 3,773
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4/1/2013 2:49:20 PM
Posted: 3 years ago
At 4/1/2013 2:47:20 PM, medv4380 wrote:
If your assumptions are true, how do you explain the deregulation of the banks in the 90's which appears to have resulted in fewer banks and financial institutions overall?

Huh?
larztheloser
Posts: 857
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4/1/2013 3:33:04 PM
Posted: 3 years ago
At 4/1/2013 12:10:02 PM, Greyparrot wrote:
Assuming regulations impose barriers of entry into the market, do regulations cause more monopolies or near monopolies than deregulation?

Barriers to entry from any source make competition more imperfect (in the economic sense of the word). That doesn't guarantee monopolies but it does increase the chances. So given that assumption, the answer to your question is yes. The others are right though - not every regulation imposes a barrier to entry. It's a dumb assumption. For example, making murder illegal doesn't stop anybody from getting into the icecream market (I should hope).
darkkermit
Posts: 11,204
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4/1/2013 3:36:05 PM
Posted: 3 years ago
At 4/1/2013 12:10:02 PM, Greyparrot wrote:
Assuming regulations impose barriers of entry into the market, do regulations cause more monopolies or near monopolies than deregulation?

The key word here is the word "assume". Obviously greater barriers to entry create near monopolies. However, for example, regulations could only apply to larger businesses, thus negating the barriers to entry.
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medv4380
Posts: 200
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4/1/2013 4:28:53 PM
Posted: 3 years ago
At 4/1/2013 2:49:20 PM, Cermank wrote:
At 4/1/2013 2:47:20 PM, medv4380 wrote:
If your assumptions are true, how do you explain the deregulation of the banks in the 90's which appears to have resulted in fewer banks and financial institutions overall?

Huh?

Are you unaware that the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 was actually a deregulation of banks and allowed them to merge with very little restriction.

Or that the Financial Services Modernization Act of 1999 removed the regulation, Glass Steagall Act of 1933, that forbid financial institutions like Lehman Brothers from owning or acting as a Bank, or Insurance company like AIG. The logic behind the 1933 act was to mitigate the risk of any single entity collapsing the entire financial system by keeping the different systems seperate.

The effect of the deregulation is clear even if you don't agree that it may have had something to do with the last financial crisis in the US.
In 1990 we had around 8500 Federal Chartered Credit Unions
by 2010 we had around 4500. The Census Bureau has a nice little tally that even includes the bank failures. The failures total doesn't account for the total lost because the loss is mostly from Merges which is what the deregulation enabled.
http://www.census.gov...
http://www.census.gov...

In terms of the OP questions it depends on what the regulation is doing as to whether it will increase or decrease competition.
darkkermit
Posts: 11,204
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4/1/2013 4:36:53 PM
Posted: 3 years ago
At 4/1/2013 4:28:53 PM, medv4380 wrote:
At 4/1/2013 2:49:20 PM, Cermank wrote:
At 4/1/2013 2:47:20 PM, medv4380 wrote:
If your assumptions are true, how do you explain the deregulation of the banks in the 90's which appears to have resulted in fewer banks and financial institutions overall?

Huh?

Are you unaware that the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 was actually a deregulation of banks and allowed them to merge with very little restriction.

Or that the Financial Services Modernization Act of 1999 removed the regulation, Glass Steagall Act of 1933, that forbid financial institutions like Lehman Brothers from owning or acting as a Bank, or Insurance company like AIG. The logic behind the 1933 act was to mitigate the risk of any single entity collapsing the entire financial system by keeping the different systems seperate.

The effect of the deregulation is clear even if you don't agree that it may have had something to do with the last financial crisis in the US.
In 1990 we had around 8500 Federal Chartered Credit Unions
by 2010 we had around 4500. The Census Bureau has a nice little tally that even includes the bank failures. The failures total doesn't account for the total lost because the loss is mostly from Merges which is what the deregulation enabled.
http://www.census.gov...
http://www.census.gov...

In terms of the OP questions it depends on what the regulation is doing as to whether it will increase or decrease competition.

Just cause there's been a few examples of deregulation doesn't mean there's an overall trend of deregulation:
http://slowfacts.wordpress.com...
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medv4380
Posts: 200
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4/1/2013 5:01:26 PM
Posted: 3 years ago
At 4/1/2013 4:36:53 PM, darkkermit wrote:
Just cause there's been a few examples of deregulation doesn't mean there's an overall trend of deregulation:
http://slowfacts.wordpress.com...

Red Herring and Irrelevant. The fact is the deregulation resulted in fewer banks, not more. Just because you can point to a graph that shows the number of pages for regulations has gone up is meaningless. That Graph happens to include things like Code 16 of Federal Regulations 1303 which bans lead paint. Or how about the Regulation imposed after 3 mile island that requires an engineer to be present at a reactor site. It is cheaper to have the reactor run by Homer Simpson up until there's a problem. Those are actual barriers to entry for morons who want to get rich quick. I'm not saying we don't have over regulation ether, but what the regulation does for or against competition varies based on what that regulation is.

In the case of Banks many of the regulations were intended to increase competition, and decrease the liability that any single entity would have. Deregulating them naturally caused few banks.
Greyparrot
Posts: 14,249
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4/2/2013 1:43:35 AM
Posted: 3 years ago
These are some great responses. I understand that it is a difficult thing to generalize, but these responses help explain the complexity of regulations and deregulations and why it is so hard to predict how they will impact the economy.
darkkermit
Posts: 11,204
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4/2/2013 2:07:15 PM
Posted: 3 years ago
At 4/1/2013 5:01:26 PM, medv4380 wrote:
At 4/1/2013 4:36:53 PM, darkkermit wrote:
Just cause there's been a few examples of deregulation doesn't mean there's an overall trend of deregulation:
http://slowfacts.wordpress.com...

Red Herring and Irrelevant. The fact is the deregulation resulted in fewer banks, not more.

And you have yet to prove that deregulation indeed happened. You want specific examples of bank regulations. How about the community reinvestment act?

Just because you can point to a graph that shows the number of pages for regulations has gone up is meaningless. That Graph happens to include things like Code 16 of Federal Regulations 1303 which bans lead paint. Or how about the Regulation imposed after 3 mile island that requires an engineer to be present at a reactor site. It is cheaper to have the reactor run by Homer Simpson up until there's a problem. Those are actual barriers to entry for morons who want to get rich quick. I'm not saying we don't have over regulation ether, but what the regulation does for or against competition varies based on what that regulation is.


In the case of Banks many of the regulations were intended to increase competition, and decrease the liability that any single entity would have. Deregulating them naturally caused few banks.

Like I said, there's no proof that there was truly deregulation of the banking industry.
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darkkermit
Posts: 11,204
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4/2/2013 2:09:23 PM
Posted: 3 years ago
For example, Glass-Steagall was repealed because Europe didn't have it in anytime in its history. So why wasn't Europe rifted with all these problems of large banking cartels?
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FREEDO
Posts: 21,057
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4/2/2013 2:11:05 PM
Posted: 3 years ago
It depends on what those regulations are. I don't see the use of making it a black and white matter.
GRAND POOBAH OF DDO

fnord
medv4380
Posts: 200
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4/2/2013 3:04:52 PM
Posted: 3 years ago
At 4/2/2013 2:09:23 PM, darkkermit wrote:
For example, Glass-Steagall was repealed because Europe didn't have it in anytime in its history. So why wasn't Europe rifted with all these problems of large banking cartels?

I have not called them cartels. We're talking about whether or not deregulation created competition. I've shown the deregulation resulted in less competition. If you want to claim otherwise you'll have to show a believable explanation for the rapid decrease the number of banks. Claiming that they all "Failed" wont work since the census data shows the total failures.

Also, claiming that we were just following Europe's lead doesn't help your case. Their banking system isn't a shining example of excellence at the moment.
darkkermit
Posts: 11,204
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4/2/2013 5:52:43 PM
Posted: 3 years ago
At 4/2/2013 3:04:52 PM, medv4380 wrote:
At 4/2/2013 2:09:23 PM, darkkermit wrote:
For example, Glass-Steagall was repealed because Europe didn't have it in anytime in its history. So why wasn't Europe rifted with all these problems of large banking cartels?

I have not called them cartels. We're talking about whether or not deregulation created competition. I've shown the deregulation resulted in less competition.

No you haven't. You just asserted it out of ur @ss by proclaiming that this was a time of deregulation which in turned caused bank formation. However, this is false because you have:
a) failed to show that bank deregulation has occured, which I have shown to be false.
b) Correlation =/= caustion.
c) Your data point is literally only one event. How predictive is your deregulation model for predicting other events?

; If you want to claim otherwise you'll have to show a believable explanation for the rapid decrease the number of banks. Claiming that they all "Failed" wont work since the census data shows the total failures.

I don't have to explain sh1t. Argument from ignorance fallacy. There are many possible explanations for the decrease number of banks, there being multiple factors as well. Do I know how much each variable effected the other one. No. :

http://en.wikipedia.org...

Also, claiming that we were just following Europe's lead doesn't help your case. Their banking system isn't a shining example of excellence at the moment.

Yes, however was it always riddled with problems? Was the US somehow the shining example of how awesome the banking industry was and how terrible European banking industry was until Glass-Seagull was (partially) repealed and all of a sudden our system got to the level of Europe?
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medv4380
Posts: 200
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4/2/2013 7:24:43 PM
Posted: 3 years ago
At 4/2/2013 5:52:43 PM, darkkermit wrote:
No you haven't. You just asserted it out of ur @ss by proclaiming that this was a time of deregulation which in turned caused bank formation. However, this is false because you have:
a) failed to show that bank deregulation has occured, which I have shown to be false.
b) Correlation =/= caustion.
c) Your data point is literally only one event. How predictive is your deregulation model for predicting other events?

You honestly believe that Removing the regulations preventing banks from merging didn't result in banks merging? Just so we're clear.

If that's the claim you're making go ahead and make. I dare you to issue a challenge taking that position.
darkkermit
Posts: 11,204
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4/2/2013 8:04:17 PM
Posted: 3 years ago
At 4/2/2013 7:24:43 PM, medv4380 wrote:
At 4/2/2013 5:52:43 PM, darkkermit wrote:
No you haven't. You just asserted it out of ur @ss by proclaiming that this was a time of deregulation which in turned caused bank formation. However, this is false because you have:
a) failed to show that bank deregulation has occured, which I have shown to be false.
b) Correlation =/= caustion.
c) Your data point is literally only one event. How predictive is your deregulation model for predicting other events?

You honestly believe that Removing the regulations preventing banks from merging didn't result in banks merging? Just so we're clear.

If that's the claim you're making go ahead and make. I dare you to issue a challenge taking that position.

No, I'm stating that deregulation does not cause bank mergers, not that regulations prevent bank mergers don't result in mergers. Deregulation encompasses a whole set of legislation. I'm also claiming that on net, there was no bank deregulation. There was regulation added and a few deregulation bills.
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