Morning Mark

Agreeing with Mr. Hoenig: smaller banks.
Taking the idea one step further, less federal control and more state regulation throughout the entire spectrum of decision making and legislation. Allow state legislatures to compete with eachother in the arena for social and economic issues. Diversify the process.

More financial firms -- with none too big to fail -- would mean less concentrated financial power, less concentrated risk and better access and service for American businesses and the public.

Smaller banks would make bailouts tougher but I think that we should work on the feedback problems in banking first. I think the feedback problem is the main problem. Lately I have started to think that there are feedback problems for banks while property prices are rising not just when they are going down.

Many smaller banks aren't better than a few big ones if the small ones all fail at the same time for the same reasons. One small bank failure is obviously less bad than one big bank failure, but if the small banks face the same incentives as the big banks, they will behave in the same way.