Banks that teetered on the edge of extinction last year are returning to their old ways as the shock of the financial crisis fades, the Wall Street Journal reports. The banks are handing out hefty compensation packages again and dealing in the same risky financial instruments that caused last year's collapses. Wall Street "has been tiptoeing back into the pond," says one former regulator. "They have short memories."
The radical overhaul of financial regulation called for in the wake of the financial crisis has failed to materialize, with reform plans becoming bogged down amid infighting between regulators and lawmakers. Regulators warn that momentum for reform is being lost as the banks return to profitability. "We are under no illusion that things left to their own devices will evolve back to a healthy normal," said White House National Economic Council Director Lawrence Summers.