William B. Harrison Jr.
The New York Times
The argument for breaking up big banks may be “simple and sound-bite-ready,” said William B. Harrison Jr., the former head of JPMorgan Chase, but every part of it is “based on a fallacy.” Critics say there was something unnatural about combining commercial and investment banking to create universal banks over the past decade. In fact, bank consolidation “was driven by the market’s needs” and has provided far greater efficiency to customers. In the financial crisis, remember, “none of the first institutions to fail”-—Countrywide Financial, Bear Stearns, Lehman Brothers-—were universal banks. Nor are large institutions too risky and complex: It’s mostly smaller firms like MF Global and Knight Capital that have spectacularly failed to manage risk. Actually, “complexity can be an antidote to risk,” since a large bank’s diversified activities help cushion it against losses in any one division. It’s also “just false” to say that banks have undue political power; regulators make independent judgments all the time. By fostering “more innovation, greater convenience, and consistent, reliable service,” large banks give the U.S. a competitive edge it “can’t afford to lose.”