How Wall Street Won the War (And What Happens Next)

The savings-and-loan scandal of the 1980s resulted in more than 1,000 indictments and jail sentences. This much greater scandal has led to only a handful of minor indictments, none for senior officials, and very few imprisonments. Executives at highly fraudulent banks haven't even paid for their institutions' misdeeds with their own money. They been allowed to keep their enormous bonuses and salaries, while shareholders -- many of whom were deceived by the same institutions -- bear the multibillion-dollar cost of others' malfeasance.

It's true that some banks aren't making quite as much money as they might like. Goldman's numbers  are  down from previous years. But White fails to mention that Goldman earned a record $13 billion in 2009, the year after it was rescued by taxpayers. Every year can't be that good.

It's also true that the Dodd/Frank reform law offers some improvements over the previous system. But too-big-to-fail banks still pose a threat to the global economy. These undeserving beneficiaries of public largesse still enjoy an unfair advantage over their competitors, thanks to expectation of more government bailouts should they start to fail again.

Yes, the big banks won. We still don't have the consumer protections of Glass-Steagall, which would wall off banking from high-risk trading. Washington lobbyists are still hard at work undoing the reforms we did get -- as can be seen in bills like this "bipartisan" attempt to undo derivatives regulation, supported by both Republican and Democratic members of Congress. And without arrests and personal fines, bankers have no reason not to keep breaking the law again and again.

The Republican Party is still a wholly owned subsidiary of Wall Street, the kind of place where a GOP Banking Committee chair feels free to say that "Washington and the regulators are there to serve the banks." Too many Democrats are also eager to play along, too. That's how "bipartisan" deregulation gets passed -- and how bankers escape indictment.

That's why the leaders whom White mentions disapprovingly, like Elizabeth Warren, are so important. They're not the relentless and unforgiving conquerors White portrays. In reality they're lone voices crying out in a campaign-cash-financed wilderness.

The institutions of government rescued bank CEOs from the consequences of their own poor management. And while they were being rescued -- and further enriched -- by institutions like the Treasury Department and the Federal Reserve, homeowners and the jobless were left to twist slowly in the wind.

Wall Street bankers made extraordinary sums of money through fraud, without being held accountable for the crimes that enriched them. Their values are polluted and their ethics are tainted. As the president of the New York Federal Reserve Bank said, "There is evidence of deep-seated cultural and ethical failures at many large financial institutions." Justice has yet to be served, and the public has yet be adequately protected through regulation and oversight.

There  was  a war -- and Wall Street won it. Fortunately, there are some leaders in Washington who refuse to surrender. If others join them, spurred on by public pressure, we can eventually turn the tide. That prospect isn't likely to please the bankers or the lobbyists. They may not even be thrilled about it at Politico. But for much of the country, it's the only hope they've got left.