Why U.S. Banking Law Is the Antitrust Tool We Overlook

Amid the intensifying debates on corporate monopolies, an unexpected silence surrounds one of the largest concentrations of economic power in the U.S. financial system—the banking industry. While technology companies such as Amazon, Google, and Meta face increasing antitrust scrutiny, America’s banking industry continues to consolidate.

U.S. banks are getting larger and consolidating power with little public debate, as the focus of financial regulation seems more concerned with the risks of “too big to fail” than with addressing the rising concentration of power in the banking sector.

In a recent article, Saule Omarova of University of Pennsylvania Carey Law School and Graham Steele, an academic fellow at Stanford Law School, frame U.S. banking law as an existing anti-monopoly framework. They argue that banking regulations, rather than a mere set of rules for financial stability, serve a critical role in safeguarding excessive concentration of private power over the industry.

Omarova and Steele note that it is surprising that antitrust issues at big banks are often overlooked, considering that financial institutions are subject to competition policy, including regulations administered by agencies in coordination with the Department of Justice. The authors argue that “too big to fail” are nonetheless shielded from market discipline due to their size and perceived importance to economic stability.

They argue that, for the past fifty years, regulators have prioritized the stability of the banking system and the safety of financial institutions, relegating competition concerns to a secondary position. They contend that large banks are primarily managed through macroprudential regulation—a set of policies and tools designed to protect the stable functioning of the financial system. They note that regulators generally do not view concentration and consolidation as problematic as long as banks meet prudential requirements.

Omarova and Steele challenge the prevailing view that antitrust and banking law are separate and disconnected fields. They suggest that antitrust laws such as the Sherman Act of 1890 and the Clayton Act of 1914 were developed in response to growing monopolies threatening economic and political democracy. Building on this, Omarova and Steele argue that banking laws share the same origin as antitrust laws and can be understood as a sector-specific antitrust regime.

Despite the antimonopoly foundations of U.S. banking law, Omarova and Steele explain that the banking sector has undergone decades of deregulation following the Gramm-Leach-Bliley Act of 1999, which allowed the formation of large, diversified financial conglomerates. They argue that deregulation was justified as a way to encourage innovation and competition, yet Congress failed to put in place rules to manage new risks—an oversight that became evident…