Chairman Dodd, Ranking Member Shelby, and Members of the Committee thank you for the opportunity to testify today.

No doubt, the American people expect significant remedial action in the aftermath of the extraordinary government support to financial institutions over the past year. Indeed, this is probably a generational moment in which this Congress will shape the financial landscape for decades to come. At the outset, however, we must remember that greater discipline does not always follow from more intricate oversight.

The Problem

In fact, complexity has been the bane of our financial system for decades and cannot
be the solution going forward. We have created an intricate, multifaceted terrain of opportunities through our financial regulations, tax codes, and accounting rules. There are multiple federal regulators and state alternatives. Different jurisdictions offer varied enticements in terms of favorable legal structure and tax treatment. And the tax code ranges across region and over time.

Vincent Reinhart is a resident scholar at AEI.

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