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Arnold Kling

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I have an article in National Review (April 5 edition) on financial regulation.

Notwithstanding the good intentions of policymakers, who no doubt plan to create a stronger regulatory apparatus going forward, large banks will inevitably have too much power for the apparatus to govern them...So long as big banking is conjoined to big government, that is, we risk a return to the regime of private profits and socialized risk.

...To expand free enterprise, shrink the banks.

Other articles on the topic are by Veronique de Rugy and by Stephen Spruiell and Kevin D. Williamson.

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CATEGORIES: Finance: stocks, options, etc.

COMMENTS (4 to date)

Latest Comment

Philo writes:

"To expand free enterprise, shrink the banks." It would be better to arrange things so that the failure of even a large bank would not threaten the overall financial system. This would probably require an end to deposit insurance, as well as readiness and willingness for aggressive monetary policy.

Posted March 23, 2010 3:30 PM

Richard A. writes:

If everyone were to move their money from the big banks to the small banks, the big banks would shrink. Because of FDIC insurance, this would not be a risky move.

Posted March 23, 2010 4:15 PM

Arnold Kling writes:

Richard, "everyone" would have to include large institutions, who might have to forego higher returns

Posted March 23, 2010 5:50 PM

Stephen M writes:

Mr. Kling,

Perhaps it is a better argument "To shrink the banks, expand free enterprise"?

Posted March 24, 2010 1:33 PM

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