Working Papers
The Anatomy of Capital Returns over the Very Long Run: Germany, 1465–2025
Economics Working Paper 26128
November 6, 2026
Published May 30, 2025
For decades, U.S. financial policy has sustained a cycle of excessive risk-taking and taxpayer-funded bailouts. Implicit guarantees have distorted incentives, weakened market discipline, and shifted financial risk onto the public. Legislative efforts such as the Dodd-Frank Act, while aimed at reform, ultimately codified government support for firms deemed too big to fail. True reform begins with credibility: ending bailout expectations, strengthening equity requirements, leveraging private market discipline, and instituting executive clawbacks. Deregulation alone will not fix a broken system — credibility and accountability must come first.
Check out more from Ross Levine:
- Read "Rebuilding the Firewall against Moral Hazard” by Ross Levine here.
- Read "Trump Wants to Unleash the Banks. End the Bailout Culture First" by Ross Levine here.
- Watch "Challenges Facing The US Economy" with Ross Levine here.
Learn more about Ross Levine here.
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The opinions expressed are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University.
© 2025 by the Board of Trustees of Leland Stanford Junior University.
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