Since the country’s founding, states have fashioned most of the regulatory landscape for the incorporation and supervision of corporations in the United States. Many laud the resulting competition among states as they pioneered innovation in laboratories of experimentation to determine the optimal structure of corporate law.
In recent years, that competition abated considerably, Delaware having won, with some newfound competition for it from Washington taking the place of erstwhile state competitors. To many, including Roberta Romano, that state system of corporate regulation appeals and a deep commitment to state production sought, yielding a race to the top; to others, say Lucian Bebchuk, that system fails miserably, being a race to the bottom, and can only be corrected by preempting state corporation law and vesting corporate authorization and supervision in federal law.
The logic of the Treasury Department’s blueprint for changes in US financial regulation offers up yet another alternative that may likely be unappealing to both sides of that debate. State corporate law could be preempted in pretty much the same way that the blueprint imagines preempting state insurance law.