Top European finance officials met again Sunday in Brussels to try and prevent a financial collapse and save the continent from its debt crisis.
Europe's debt situation differs from what happened in 2008 in the U.S., where banks lent money to fuel an unsustainable housing boom. Still, a default in Europe could have serious consequences on Wall Street and on global markets.
As the European markets get closer to a meltdown and the echoes of the 2008 banking crisis still resonate in the U.S., has anything changed on Wall Street in the past few years?
The Dow Jones industrial average recently reached a three-month high. Despite high unemployment, many on Wall Street are still making big money, says Jesse Eisinger, who covers finance for ProPublica.
Eisinger tells Guy Raz, host of weekends on All Things Considered, that though the Dodd-Frank financial oversight law tries to prevent Wall Street banks from doing the sort of proprietary trading that led to the financial crisis, it doesn't mean it's not still happening.
"They can't do that as much, which leads to being less profitable," Eisinger says. "But they're still doing a lot of trading for their own account — it's just much harder to see."
The ecosystem of financial institutions funding other financial institutions without any larger societal benefit is unsustainable, Eisinger says. He says the current caution on Wall Street created by the Dodd-Frank law is going to be temporary unless there's serious structural change to the financial system.
"We didn't break up the banks; we didn't make them smaller -– we just asked them to change their behavior," he says. "That works maybe for a couple of years ... but that won't work in the long term."
Still Too Big To Fail
Though many ordinary people have lost millions, it's business as usual for the large investment firms. For example, investment banking giant Goldman Sachs announced a quarterly loss last week — just the second time since 1999 it has posted a loss; yet Goldman still set aside more than $10 billion for year-end bonuses.
Former New York Gov. Eliot Spitzer, who also served as New York's attorney general, says small investors do not get a fair shake on Wall Street.
"Small investors are sold stuff that they should not be sold," Spitzer tells Raz. "They have sold a product to the public and then bet against it -– they have designed it to fail."
Large investment firms have access to IPOs, stocks and information, among other things, in order to make money, Spitzer says. He says these advantages create conflicts of interest in the products they create for small investors.
"I spent many years as attorney general trying to root out the inherent conflicts of interests," he says. "[The people] who put together these products may have one thing in mind that may not be in the best interest of the person who was sold that product."
In a recent article for the online magazine Slate, Spitzer says the Occupy Wall Street movement has "shaken up American politics." He says it has helped re-inject the issue of income inequality, jobs and equity into the political discussion, which until now has been focused solely on debt reduction.
Although Wall Street might be an easy target for critics of the financial crisis, Spitzer, like Eisinger, says it's the very structure that is the problem. He says structural reforms in the financial industry are the first critical step in dealing with equity and growth issues.
"We still have major institutions that are more concentrated now than they used to be," he says. "Have we made some progress? Sure, but not enough."