A fairly broad view of U.S. banking reforms adopted since the financial crisis of 2008 reveals surprisingly little for a clear reason: Not much has changed.
Banks, in the parlance of Wall Street, escaped great harm from the regulations imposed by the Barney Frank/Christopher Dodd financial overhaul bill. Those massive bonus checks handed out by banks did not take 10 years to recover or even five or even two. They simply roared back.
Meanwhile, big banks got much, much bigger as Wells Fargo & Co. swallowed up Wachovia and Washington Mutual, Bank of America gobbled up Merrill Lynch, and JPMorgan Chase & Co. purchased the crippled investment bank Bear Stearns.
Somewhere in here is a question about what Charles Darwin would say if he went into the banking business.
In effect, what the reforms missed is a clear swipe at the bottom line -- the fundamentals, the basics. The lack of any mandate for banks accepting bailout funds to increase lending and the lack of meaningful reform on bonus checks meant, essentially, that post-reforms, tweaks aside, banks could return to business as usual. In short order, that's just what they did.
It is not surprising that U.S. Treasury Secretary Timothy Geithner is in Europe applauding another business-as-usual scheme: the latest proposals from German Chancellor Angela Merkel on how to save the euro.
Merkel is hammering nails in the coffin of the 11-year experiment called the euro and Geithner is in Europe applauding the "progress" made in recent negotiations between Merkel and French President Nicolas Sarkozy.
But Merkel's reforms are simply business as usual. A system for fining nations that are not in compliance with eurozone rules does nothing to address the economic imbalance between Germany and Greece or Spain or Italy. A larger rescue fund, similarly, does not change the fundamental structure of the eurozone. It only delays the region's demise. A central government not backed by a strong central bank -- both of which need to be backed by a central tax authority -- is unlikely to succeed.
Investors will be hanging onto the edge of their seats Thursday and Friday as European leaders meet to discuss Merkel's grand plan for the region. Lacking anything better for the moment and pressured by markets to move forward -- and with support from the United States -- Merkel's reforms seem likely to gain approval. In the future, if the plan holds, Greece will be impoverished, as it is now, and punished for its inability to keep up. It's hard to see how that solves anything.
In international markets Wednesday, the Nikkei 225 index rose 1.71 percent while the Shanghai composite index in China gained 0.29 percent. The Hang Seng index in Hong Kong added 1.58 percent while the Sensex in India rose 0.43 percent.
In Australia, the S&P/ASX 200 index gained 0.72 percent.
In midday trading in Europe, the FTSE 100 index in Britain dropped 0.34 percent while the DAX 30 in Germany lost 0.87 percent. The CAC 40 in France shed 0.6 percent while the Stoxx Europe 600 lost 0.47 percent.