The Folks Who Sell Your Corn Flakes are Acting Like Goldman Sachs

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Media Outlet: The New Republic

In July, the public learned that Goldman Sachs and several other large banks have morphed into giant merchants of physical goods, routinely shipping oil, running power plants, and amassing stocks of metals so large that Coca Cola accused them of hoarding. It was a disconcerting moment, as regulators realized that firms so recently known for their explosive mortgage-backed securities also deal in goods that can literally explode. These activities mean that banks supplying credit to businesses in the real economy were now also competing with them, opening up a Pandora’s box of perverse incentives and risks. Since the revelations, officials have cracked down, and the banks say they have moved to discard some of these mines and warehouses, returning to more traditional forms of banking.

Author:

Lina Khan was a fellow with the Open Markets program at New America, where she researched the concentration of power in America’s political economy and the evolution of antitrust laws.