This is not only a time of great consequence for financial regulation and the US economy. It is also a time for choosing.

Washington is seeking to repair the regulatory system. This is a wholly worthwhile task. Improvements in regulatory policy – if part of a broader review of the financial architecture – could herald greater prosperity for future generations. But efficacy, not convenience, should be the goal of policymakers. We will have done ourselves no favours if what is billed as “comprehensive regulatory reform” over-promises and under-delivers.

The prevailing theory has it that financial institutions engaged in practices that begat the financial crisis. To redress these wrongs, sweeping new regulatory powers will treat the infirmities that ail us. This theory has understandable appeal, but is deficient in important respects.