Bubbles and manias, followed by crashes and hangovers, seem endemic to capitalism. The Wall Street overhaul enacted last year hopes to blunt the impact of such boom-and-bust cycles — by reining in the use of exotic financial instruments, better supervising big banks and limiting the damage if one of them fails.
But the first two efforts are under attack by the new Republican majority in the House, and the new process for containing the fallout from a giant bank’s collapse is untested. Meanwhile, the financial sector’s outsized role in the economy hasn’t changed; the giant banks that were considered “too big to fail” have only gotten bigger.
It was not the same the last time around.