President Joe Biden’s top economic aide, Lael Brainard, will double down on the administration’s pledge to champion competition in a speech to an anti-monopoly summit, which takes place after this week’s seizure of First Republic Bank raised fresh questions about consolidation and vulnerability in the banking industry.
(Bloomberg) — President Joe Biden’s top economic aide, Lael Brainard, will double down on the administration’s pledge to champion competition in a speech to an anti-monopoly summit, which takes place after this week’s seizure of First Republic Bank raised fresh questions about consolidation and vulnerability in the banking industry.
Brainard, the former Federal Reserve vice chair who now heads the White House economic council, will warn against corporate consolidation that the White House argues hurts consumers and leaves eggs in too few baskets in critical industries.
“Competitive market structures mean a more resilient economy, so that shocks don’t paralyze the entire system when a few suppliers or middlemen become choke points,” Brainard will say in her address on Thursday, according to prepared remarks.
Biden’s anti-consolidation campaign has its limits, however, and recently ran headlong into a crisis: US bank failures. The administration blessed the move announced by regulators this week to seize the ailing First Republic, which was then acquired by JPMorgan Chase & Co., making the biggest US bank even larger.
Brainard’s prepared remarks don’t address that episode, the latest involving a failed bank, but did temper expectations for quick solutions. “Changing course following decades of increasing consolidation in our economy is a significant task. So let me be very clear today: we’re just getting started, and we remain committed to finishing the job.”
Brainard took the NEC role in February, succeeding Brian Deese. Both also served as chair of the White House Competition Council. Brainard touted measures such as restricting so-called “junk fees” and curbing the cost of hearing aids.
She also cites competition — or a “level playing field” for American firms — as an ethos underpinning Biden’s push to remake global supply chains, including by offering incentives for companies to bring back manufacturing to the US in order to prevent economic shocks like those experienced in the coronavirus pandemic and after Russia’s invasion of Ukraine.
“CEOs have been clear — they need diversified suppliers and supply chains, including new domestic production, to ensure that they are resilient to global shocks,” Brainard will say.
In the aftermath of of JPMorgan’s First Republic acquisition, some Democratic lawmakers have chafed at consolidation in the financial industry and other industries.
“The failure of First Republic Bank shows how deregulation has made the too-big-to-fail problem even worse,” Senator Elizabeth Warren, a Massachusetts Democrat, tweeted earlier this week.
The White House said it supported the move because it was cheaper for the Federal Deposit Insurance Corporation, and the alternative was a taxpayer-financed rescue, which Biden didn’t want.
“It was necessary to ensure continued resilience of the banking system and to do so at no cost to the taxpayers,” White House Press Secretary Karine Jean-Pierre said Monday after the deal was announced. “More broadly, no recent administration has done more to promote competition, address concentration process across industries.”
Brainard’s February move to the White House left an opening at the Fed. Biden has decided to nominate the Fed’s Philip Jefferson to serve as vice chair and nominate Adriana Kugler to a board post.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.