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Trying to Change Wall Street Four Years After the Crisis

Morgan Housel
January 31, 2013

Wall Street's meltdown occurred more than four years ago. People are getting a little tired of hearing about how banks took risks so large they nearly took down the entire economy, and how little has changed since then. They've heard it a thousand times. 

But this story should never get old, because it has the potential to affect everyone in profound ways. The top four banks, Bank of America (NYSE: BAC), Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM), and Wells Fargo (NYSE: WFC), are in aggregate larger today than they were five years ago. When the next banking crisis hits -- and it will -- it very well could be 2008 all over again.

What can we do about it? Last week, I sat down with Ron Suskind, a Pulitzer Prize-winning author of five books. His latest, Confidence Men, explores President Obama's first two years in the White House, which provided Suskind with a unique view on the relationship between Washington and Wall Street. Here's what he had to say about bank regulations (transcript follows):

Ron Suskind: Dodd-Frank is on the books. I don't think Wall Street is all that concerned about it, which I think gives you a little bit of pause. But the fact is there's going to be battles over the coming years with lots of rule-writing, that's why the whole town [Washington DC] is organized with lots of well-funded communities of lobbyists -- and former senior officials, frankly -- to make sure the rules are written just so. I think rigor on that front is an area of real opportunity for Obama. The fact is, some of the structural suggestions of Dodd-Frank probably can be carried forward up to a point, but when it comes to Wall Street, I think that the big opportunity of 2008 and 2009 is going to be hard to restore, replace, or revive. As long as the money is cranking, even if it is not grounded in the kind of economic forward motion that the country needs, Wall Street will continue