“More intense regulatory and technology requirements have raised the barriers to entry higher than at any other time in modern history,” said Mr. Blankfein. “This is an expensive business to be in, if you don’t have the market share in scale…

…Consider the numerous business exits that have been announced by our peers as they reassessed their competitive positioning and relative returns.”Longer term, Mr. Blankfein sees more opportunities for global giants like Goldman to grab even more market share, as “only a handful of players” will likely be able “to effectively compete on a global basis.”, “Regulation Is Good for Goldman”, Wall Street Journal Editorial Board

Review & Outlook

Regulation Is Good for Goldman

Lloyd Blankfein and Elizabeth Warren find common ground.

Liberals like Sen. Elizabeth Warren (D., Mass.) are treating the 2010 Dodd-Frank financial law as holy writ because she says it punishes the big banks. But then why is Lloyd Blankfein so content? On Tuesday at an investor conference, the Goldman Sachs CEO explained how higher regulatory costs are crushing the competition.

“More intense regulatory and technology requirements have raised the barriers to entry higher than at any other time in modern history,” said Mr. Blankfein. “This is an expensive business to be in, if you don’t have the market share in scale. Consider the numerous business exits that have been announced by our peers as they reassessed their competitive positioning and relative returns.”

Lloyd Blankfein, chief executive officer of Goldman Sachs

Lloyd Blankfein, chief executive officer of Goldman Sachs Photo: Bloomberg

Longer term, Mr. Blankfein sees more opportunities for global giants like Goldman to grab even more market share, as “only a handful of players” will likely be able “to effectively compete on a global basis.”

While the Goldman boss wasn’t endorsing all of the added directives from Washington, he said his bank is “prepared to have this relationship with our regulators”—and the regulators are prepared to have a deep relationship with Goldman—“for a long time.”

None of this will surprise our readers, who understand that one goal of Dodd-Frank was to turn big banks into the equivalent of financial utilities. But it is unusual to see a financial CEO like Mr. Blankfein state the effect so candidly. Goldman can afford to hire battalions of lawyers and lobbyists to commune with regulators, and no doubt some of Wall Street’s campaign contributions from its regulation-aided profits will even make it to the likes of Ms. Warren. As ever, powerful government mainly helps the powerful.

Posted on February 17, 2015, in Postings. Bookmark the permalink. Leave a comment.

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