In other words, the "tightened oligopoly" described by Zandi has precluded small and mid-size banks to compete.
In addition, JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country's derivatives risk, and 96% of the exposure to credit derivatives.
Federal investigators are currently looking into whether illegal, collusive actions took place with regards to derivatives by the giant banks and others (mainly in regard to credit default swaps).
The giant banks have also used their Counterparty Risk Management Policy Group(CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with the government's blessings.
The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets - making up more than 70% of stock trades - but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).
Goldman also admitted that its proprietary trading program can "manipulate the markets in unfair ways".