So the “innovation” that regulators, academics, consultants, and banks were all advocating more than 20 years ago was regulatory arbitrage, pure and simple. When you have regulators undermining the rules and depicting it as virtuous, behavior like Blinder’s is simply more of the same.

Fascinating. And she’s dead-on here:

Unfortunately, the Obama administration had the opportunity execute more fundamental reform at the outset. Worse, Obama himself recognized it; he was reading biographies and speeches of FDR as president elect, yet chose to pass on an historical opportunity…

I can’t imagine any senior politician now having the confidence now to defy the will of the banking industry. And it isn’t simply due to the role of corporate funding in campaigning; the roots are deeper. Being in office now is all about winning, about keeping one’s hold on power, so it isn’t surprising that everyone has a price.


Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.