No one expected decades of financial system dysfunction to be remedied overnight. But more than one year after Wall Street missteps sparked chaos and sent the nation spiraling into turmoil, real reform efforts are, at best, limping along, leaving a range of critics impatient – and some of them aghast.
"It's gotten worse," said Simon Johnson, an MIT economics professor who several months ago told Congress that the risks still being taken on Wall Street imperiled taxpayers seriously enough to warrant a government bust-up of "too big to fail" institutions.
Johnson told ABC News.com that the government's failure to adopt any meaningful structural changes or step up policing on Wall Street has resulted in business as usual and created a more precarious economic situation today than when the financial meltdown began in September of 2008.
"The big banks have gotten bigger," Johnson said. "Their problems are getting more dangerous over time."
With the Financial Crisis Inquiry Commission, a bipartisan panel appointed by Congress, grilling key players from Washington today on what caused the financial crisis, ABCNews.com decided to examine some of the root problems to see which ones continue to fester largely unaddressed.
For all of the attention given to the need to reform Wall Street compensation practices, the issue is far from resolved. By month's end, the largest Wall Street banks will have handed out more than $100 billion in year-end "incentive pay," or bonuses. Goldman Sachs alone is expected to pay out more than $20 billion.
The Obama administration appears to be mulling a new form of bank tax and did appoint a special paymaster to regulate the pay practices of bailed-out firms. But the bulk of Wall Street banks are out from under the TARP, and as such are free to dole out pay packages that many critics believe lead to excessive risk taking, with taxpayers ultimately footing the bill.
"Insanity is doing the same thing over and over and expecting a different result," said Nell Minow, cofounder of the Corporate Library. "It seems to me insane to continue with compensation structures that are completely out of line with risk management."
Even billionaire Bill Gates has weighed in on the issue, telling an audience at New York's 92nd Street Y a few months ago that "Wall Street pay is often too high."
In Europe, particularly in the U.K., authorities have taken pointed action, levying stringent taxes on financial bonuses. Here in the U.S., pay reform has been talked about, with the Federal Reserve Board, Department of Treasury and the Federal Deposit Insurance Corporation all bandying ideas about. However, the issue has largely been left to the banks themselves to address.
Indeed, some policies have been adopted by the industry itself to discourage excessive risk-taking with respect to pay, stressed Scott Talbot, senior vice president for government affairs at the Financial Services Roundtable, an industry lobby group.
"You see compensation practices focusing the employee on the long-term, greater use of claw-backs and deferrals, longer vesting schedules for stock options and greater use of stock – those four techniques are essential," he said. "Every institution is using one or some combination of them to eliminate excessive risk-taking."