Look upon my works, ye mighty, and despair

Here's more evidence that weak regulation played a huge role in the financial collapse. And that won't be the last such article.

Bush and his hands-off approach to the economy deserve some of the blame for this, of course, but it looks like Bill Clinton's administration had a lot to do with it as well:

[Citigroup's] downfall was years in the making and involved...Robert E. Rubin, an influential director and senior adviser.

Citigroup insiders and analysts say that [CEO] Prince and Mr. Rubin played pivotal roles in the bank’s current woes, by drafting and blessing a strategy that involved taking greater trading risks to expand its business and reap higher profits. Mr. Prince and Mr. Rubin both declined to comment for this article.

When he was Treasury secretary during the Clinton administration, Mr. Rubin helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent.

And since joining Citigroup in 1999 as a trusted adviser to the bank’s senior executives, Mr. Rubin, who is an economic adviser on the transition team of President-elect Barack Obama, has sat atop a bank that has been roiled by one financial miscue after another.

It looks like Robert Rubin is to Citibank as Henry Paulson is to Goldman Sachs - a high-flying CEO who got out of banking and into government at an oportune time and used his newfound powers to help the company he once ran. Needless to say, I'm pretty uncomfortable having him as an advisor on the Obama team.

On a related tangent, Krugman digs up a paper showing that Wall Street was responsible for a lot of the massive growth in income inequality during the Bush years (and, by extension, for reducin the move toward equality in the Clinton years. Remember, in the last decade inequality has been driven by the top 1% pulling away from everyone else, and the top 1% worked largely for Wall Street. Which means that if the finance industry shrinks anywhere near as much as everyone expects it to, our country should see a big move toward income equality, without the need for any change in labor laws.