The Obama administration has vowed to clean up excesses and abuses in the U.S. financial system that precipitated the global credit crisis. But critics say it is just as much in thrall to the Wall Street establishment as its predecessors.

Two recent essays have highlighted the idea that Washington has been captured by the finance industry it seeks to regulate. In an illuminating article in the Atlantic, Simon Johnson, a former chief economist at the IMF, compares the situation with the grip of oligarchs or business elites on emerging market governments. Johnson likens the march of financial deregulation in the United States to a “quiet coup” engineered chiefly by former Goldman Sachs executives in the U.S. government.  

“To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards—contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible.”

The second piece, by private investor and former fund manager Sin-ming Shaw for Project Syndicate, argues that rigged stress tests applied to U.S. banks show the Obamistas are in the grip of a “crony capitalism” that Americans have long denounced in Third World countries, especially in Asia.  

What do you think? Are Treasury Secretary Tim Geithner and White House chief economic adviser Larry Summers part of the problem, trying to protect the big Wall Street banks from having to pay the full price of their folly? Or are they right to try to avoid nationalisation or break-up of the financial giants to avoid deeper economic havoc?