Financial Federalism

Over at National Review, I outline a case for "financial federalism," an approach to financial reform prioritizing market competition and a diffusion of interests:

Conservatives have an opportunity here to argue on behalf of a financial federalism that would attempt to ward off the dangers of asset concentration, revise limits on leverage for a variety of institutions, and draw clearer lines between various banking activities. Just as the political doctrine of federalism entails a broad distribution of government power (in federal, state, and local entities), financial federalism would put in place a financial system in which systemic risk is lessened through a broad distribution of capital and a variety of capital flows. Financial federalism would undo the distortions of Too Big to Fail. There are various economic, policy, and political reasons for Republicans to move toward market-oriented financial reform.

Read the rest here.