A Dodd-Frank for Capital Markets
An Incomplete Lesson Learned from History
When Steve Schmidt had me on his podcast and asked me to put forward a policy proposal to address these structural challenges, I suggested adding sortition to the Senate for a third of the body—citizen legislators chosen by lottery to break partisan gridlock and restore democratic legitimacy.
But upon further reflection, I think there’s a regulation that might actually enjoy bipartisan support in the coming years. Something that could be passed by Congress and signed into law without any constitutional convention. Something that addresses the structural problem at its root.
Marc Andreessen doesn’t just have wealth. He has coordinating power across venture capital, cryptocurrency, artificial intelligence, media, and now direct political access through administration appointments. He can deploy capital, shape narrative, and influence policy simultaneously. There’s no structural limit on his reach. That’s the problem.
This isn’t about hating billionaires or punishing success. It’s about preventing the self-dealing incentives that emerge when controlling interests span multiple sectors of the economy. When someone can coordinate across tech investment, crypto regulation, media messaging, and political favor, democratic constraint becomes optional. Markets stop being discovery mechanisms and start being extraction vehicles.
The United States has crossed a threshold where individual actors can simultaneously coordinate capital, narrative, regulation, and enforcement across multiple sectors. That capability did not exist at scale in prior eras. Our regulatory architecture was not designed for it. This proposal is not preventative—it is corrective. The coordination power already exists. The question is whether we structure limits now, or normalize it after democratic constraint collapses.
We’ve solved this problem before. We just forgot the lesson.
The Dodd-Frank Precedent
Before the 2008 financial crisis, the Gramm-Leach-Bliley Act of 1999 repealed Glass-Steagall’s separation of investment banking and commercial banking. This allowed institutions to combine depository banking (holding ordinary people’s savings) with investment banking (making risky bets with capital). The result was predictable: banks used depositors’ money to fuel a real estate bubble, knowing they’d be bailed out when it collapsed because they held everyone’s savings hostage.
Dodd-Frank forced separation again. Not perfectly, but enough to break the most dangerous coordination. Investment banks could gamble with capital. Commercial banks could hold deposits. But you couldn’t do both within the same ownership and control structure. The self-dealing incentive—using deposits to fuel investment positions—was structurally limited.
We need the same principle applied to capital markets broadly.
The Problem: Unconstrained Cross-Sectoral Control
Right now, a billionaire can own controlling interests across as many sectors as their capital can reach. Marc Andreessen controls venture capital through a16z, influences cryptocurrency through portfolio companies and advocacy, shapes tech policy through political donations and appointments, and coordinates narrative through media properties like the All-In podcast.
This creates second-order effects that look like coordination even without explicit conspiracy:
Deploy capital into crypto startups
Advocate for crypto deregulation publicly
Fund political candidates who promise deregulation
Use media platform to normalize the policy
Secure appointments that ensure favorable regulation
Portfolio companies benefit from the environment you created
Each step is legal. The coordination is structural, not conspiratorial. That’s what makes it so effective—and so dangerous. There’s no smoking gun because the gun is the system itself.
When the same person has controlling influence over capital deployment, regulatory advocacy, political favor, and public narrative, democratic constraint becomes friction to be engineered around rather than legitimate limitation on concentrated power.
The Proposal: Sectoral Ownership and Control Limits
Here’s the reform: You can have controlling interest in one primary sector and passive investment in no more than two secondary sectors. Everything else must flow through regulated passive vehicles with strict SEC oversight.
Primary sectors would include things like: financial services, technology infrastructure, healthcare, energy, telecommunications, media, defense, agriculture, real estate.
Secondary sectors would be industry subdivisions within those categories—fintech vs. traditional banking, renewable vs. fossil fuel energy, semiconductor vs. software technology.
Controlling interest means: voting shares that influence board decisions, operational control through advisory roles, or effective influence through capital deployment that shapes company direction. More precisely, a controlling interest exists where an individual or entity can materially influence board composition, executive compensation, or capital allocation priorities through voting power, advisory authority, or conditional financing.
If you’re a venture capitalist controlling tech infrastructure deployment, you can passively invest in energy or healthcare through ETFs or index funds. But you can’t own controlling stakes in energy companies, media platforms, and crypto exchanges simultaneously. Pick your domain. Diversify your wealth through passive vehicles. But you don’t get to coordinate power across the political economy.
How It Works: Breaking Coordination Capacity
This reform doesn’t prevent wealth accumulation. It prevents wealth from becoming coordinating power that operates outside democratic constraint.
Marc Andreessen could still be a billionaire. He could still run a16z. He could still make venture bets on technology. But he couldn’t simultaneously control crypto advocacy organizations, own media platforms shaping tech policy discourse, and deploy capital across the regulatory landscape while securing political appointments that protect his territories.
He’d have to choose: venture capital OR crypto OR media. Everything else becomes passive diversification through regulated vehicles where he can’t coordinate.
The key mechanism: passive vehicles subject to strict SEC monitoring of investment decisioning.
If you want exposure to sectors outside your controlling interest, fine. Buy index funds. Buy ETFs. Diversify through instruments you don’t control. But those vehicles get audited periodically to ensure there isn’t illegal second-order coordination—no shadow agreements to move capital in ways that bypass the regulation.
The Innovation Objection
The predictable objection is capital flight. But capital already operates globally, and innovation has flourished in jurisdictions with far stricter sectoral separation than the United States. What this reform constrains is not investment—but dominion. Capital that requires cross-sectoral political coordination to function is not innovative; it is extractive. Innovation that cannot survive democratic constraint is not innovation worth preserving.
Venture capital can still fund startups. Entrepreneurs can still build companies. Markets can still discover value. What stops is the ability to coordinate deployment, advocacy, narrative, and regulatory capture simultaneously. If your business model requires that level of coordination to succeed, the problem isn’t the regulation—it’s the business model.
Enforcement: A Tiered Oversight Regime
Here’s how this works in practice: trigger thresholds.
Once your net assets exceed $1 billion, you enter a new regulatory regime. Stricter oversight. Different rules. That’s the price of operating at that scale in a republic.
At $1 billion, sectoral ownership limits kick in. You pick your primary sector, declare your secondary sectors, everything else flows through regulated passive vehicles subject to SEC audit.
At higher tiers—say $5 billion, $10 billion—the oversight intensifies. More frequent audits. Stricter coordination monitoring. Pre-approval requirements for major capital movements across sectors.
And yes, you lose the right to day trade when you hit that threshold. Your trading plans get approved by the government. Real-time capital deployment decisions that could coordinate across your holdings? Those go through compliance review first.
This isn’t punishment. This is the recognition that at a certain scale, your capital movements aren’t just personal portfolio management—they’re economic coordination that affects markets, policy, and democratic institutions. The republic has a legitimate interest in ensuring that coordination doesn’t bypass democratic constraint.
Don’t like it? Don’t accumulate a billion dollars. Or accept that operating at that scale comes with structural oversight. Those are the options.
Yes, this makes the legal and accounting work for billionaires expensive and complex. Good. They can afford it. Enjoy your mansions and yachts and space hotels and fuck off. If you want to be a billionaire in a republic, you accept that your economic power operates under democratic constraint. That’s the deal. Always has been.
The current system makes democratic constraint the hard thing and cross-sectoral coordination the easy thing. This reform reverses that. Coordination becomes expensive, monitored, legally risky. Passive wealth accumulation remains straightforward.
Billionaires who just want to be rich can still be rich. Billionaires who want to coordinate power across sectors face structural barriers, legal exposure, constant oversight, and criminal liability if they try to game the system.
Criminal liability would attach where regulated passive vehicles are knowingly used to coordinate capital deployment, policy advocacy, or narrative influence across restricted sectors. This is intent-based enforcement, not outcome-based punishment. The standard is mens rea—you have to know you’re using passive vehicles as coordination cover. But get caught doing it? Criminal charges. Not civil penalties that become cost of doing business.
A Fair Deal in a Republic
This is a fair idea. Not radical, not punitive—fair.
It doesn’t limit how much money you can make. It limits how much power you can have. And I think that’s something capitalists should be okay with.
This is a republic, after all. The foundational bargain is that concentrated power—whether political or economic—operates under democratic constraint. You can get rich. You can build companies. You can deploy capital and take risks and reap rewards. But you don’t get to coordinate power across sectors in ways that let you write your own rules.
That’s not socialism. That’s republicanism. The same principle that prevents one person from holding legislative, executive, and judicial power simultaneously applies to economic power. Separation of functions isn’t punishment—it’s the price of operating in a system where popular sovereignty remains the final authority.
Capitalists need to be okay with that. Not because I’m asking nicely, but because that’s what distinguishes a market economy in a democratic republic from oligarchy. The difference between wealth and dominion. Between success and capture.
If you can’t accept structural limits on cross-sectoral coordination, you’re not defending capitalism—you’re defending feudalism with stock tickers. And the republic has no obligation to accommodate that.
Why This Is The Answer
The Andreessen piece diagnosed how capital plus political favor equals authoritarian infrastructure without democratic constraint. This reform breaks that equation structurally.
You can have capital. You can diversify wealth. You can invest across the economy. But you can’t coordinate deployment, advocacy, narrative, and policy simultaneously. The system forces choice: controlling interest in one domain, passive exposure everywhere else.
This isn’t socialism. It’s structural liberalism. Markets work when participants can’t rig the game through cross-sectoral coordination. Democracy works when concentrated wealth can’t buy protection from constraint across multiple pressure points simultaneously.
The alternative is what we have now: economic royalists who’ve learned that buying regulatory favor is cheaper than accepting democratic limits. Who deploy capital, secure political protection, shape narrative, and build infrastructure for extraction—all coordinated through ownership structures that face no meaningful constraint.
Dodd-Frank separated investment banking from commercial banking because combining them created self-dealing incentives that crashed the economy. We need the same principle applied to capital markets broadly because combining venture capital, crypto advocacy, media influence, and political access creates self-dealing incentives that crash democracy.
The banks can still exist. The billionaires can still be rich. But the structural capacity to coordinate power across sectors—to treat democratic constraint as optional friction rather than legitimate limitation—gets broken by design.
That’s the reform. Sectoral ownership limits. Passive vehicles for diversification. SEC monitoring for coordination. Tiered oversight based on wealth thresholds. Criminal penalties for violations.
We’ve done harder things. We just need to remember why Glass-Steagall existed in the first place, and apply that logic before the next crash.
Only this time, what crashes won’t be housing prices.
Either we accept structural limits on cross-sectoral power now, or we accept that democratic constraint itself becomes a legacy system—remembered fondly, enforced selectively, and ultimately irrelevant.
Love the concept.
It needs work.
Biggest barriers:
A) The Supreme Court believes allocating funds = free speech.
B) The regulatory rules that you need are not intuitive to most voters.
C) The Broligarchs will fight this tooth and nail.
But, still, a good concept that needs to be explored.
Great stuff for 2028.
(or perhaps fueling a study, “2029”, that details how we counteract the current study, “2025” … you know, the one that DJT claims to know nothing about.)
Great idea, but we can go much, much farther. I disagree that the "rich can still be rich". We've had quite enough of that; let's get very specific. We can go way past Dodd-Frank and complete the democratic revolution by changing the nature of corporations to incorporate all players impacted by the corporations. Moreover, reinvestment within public purposes can be enforced by taxing idle wealth rather than work. Let entrepreneurs engage the friction of community protection from the get-go. Create a competitive public banking system that turns public investment returns back to the public domain instead of private pockets.