President Biden, on July 9, issued an Executive Order on Promoting Competition in the American Economy.  This sweeping Order states that it strives to promote competition, stem the flow of consolidation within certain industries and halt the abuses of market power.  The Order seeks to achieve these ends through a variety of mechanisms, including the creation of a new council that will provide oversight in the area of consolidation and unfair competition, implementation of new rules and regulations, and reduction or removal of barriers to entry.  An overarching goal seems to be to promote competition for the benefit of American workers and consumers based on the premise that excessive economic consolidation results in a negative impact on society. 

While the Order focuses on a number of sectors more generally, for consumers in the financial services sector, the Order’s general position is that consolidation can mean adverse impact on financial services, including decreased availability of loans and other financial products, higher fees, and branch and business closures within a community.  For workers within the industry, the Order’s position could mean fewer jobs and less negotiating power when workers attempt to bargain for better wages and improved working conditions.  Combining this concentration of power with the increased use of non-compete agreements by companies, the Order suggests that the result can have not only a detrimental effect on workers’ abilities to improve their positions, but also a chilling effect on their ability to change jobs.

What will the impact be on the financial services sector?  It is too early to tell.  Both the Chair of the Federal Trade Commission (FTC) and the Director of the Consumer Financial Protection Bureau (CFPB) were tasked with addressing anticompetitive practices and encouraged to use their respective rule-making authority to tackle unlawful activities, unfair competition and the portability of financial transaction data.  While the Order specifically mentions steep fees, it does not direct either agency to commence specific actions.  It is not likely that action will be taken in the short term from particular practices.  However, the Order sets up conditions for long-term action.

 If you have any questions about this order or have any other questions, please email me at cbetanzos@garrishorn.com