The crusading spirit that at one stage threatened to lead to the nationalization of U.S. banks and the downfall of their top executives now seems like ancient history.
Banks are again flexing their muscles and have turned the tables on America’s politicians. Remarkably, policy makers now seem to be struggling to secure even a modicum of needed change in the regulatory system.
The winter’s paroxysm of public anger has dissipated with astonishing speed. This is in spite of the fact that economic recovery still seems a distant goal and the woes of CIT Group suggest that even the financial system is not out of the woods. As a result there is now a real danger that the administration and Congress will fail to live up to Rahm Emanuel’s famous injunction never to let a crisis go to waste.
The ability of the financial lobby to hold onto its political power has been one of the great mysteries of the crisis. Few special interest groups have shown such flexibility in their logic.