Federal Reserve Chairman Alan Greenspan warned Tuesday against overreaction to a national wave of megamergers, saying there is no sign of economic danger. He suggested the government should respect the "dynamism of modern free markets."
It's the fifth burst of business mergers this century, Greenspan told senators, and there is little reason to think it will have any more effect than the previous one in the 1980s.But Sen. Edward Kennedy, D-Mass., voiced worry about the thousands of employees losing their jobs because of mergers while some company executives get big benefit packages known as "golden parachutes."
"What happens to the people in these mergers?" Kennedy asked at the hearing by the Senate Judiciary Committee.
And Sen. Charles Grassley, R-Iowa, wondered whether the recent string of big bank mergers could reduce the credit available in rural areas.
Committee Chairman Orrin Hatch, R-Utah, said policymakers must "start thinking about the broader, long-term consequences of the consolidation wave that is rippling through our economy."
Greenspan acknowledged there would be job losses from mergers, but said a growing economy should be able to handle the displaced workers. He noted that 300,000 U.S. workers lose their jobs each week but with the creation of new jobs the unemployment rate stands at a 28-year low of 4.3 percent.