Did the Government Used to Break Up Companies for Being Too Big to Fail?
Question: In the ’50s and ’60s, big companies were broken up if they became too big — like Ma Bell into the regional baby bells. GM was on the threshold of being broken up. I guess this was the federal government keeping these companies from becoming “too big to fail”. What policy or sequence of events stopped that oversight and gave us too-big-to-fail financial companies?
Paul Solman: The reasoning behind the break-up of Ma Bell in the ’80s or Standard Oil a century ago was anti-competitive practices, not Too Big to Fail. The movement was called “trust busting” in the days of Teddy Roosevelt and John D. Rockefeller because the giant firms were “trusts” that monopolized their markets and thus supposedly forced consumers to pay higher prices while stifling new competitors and innovation.