Part of whatâ€™s changed is the business outlook, sure. And part of whatâ€™s changed is peopleâ€™s attitude toward risk. But in addition to becoming more risk-averse, I think people have lost confidence that the brands and institutions governing the financial system actually work. Beyond stimulus, beyond bank rescue plans, I think this is another factor the world is going to have to address to get to recovery. In part, thatâ€™ll be the responsibility of the Obama administration and the congress. In part, itâ€™ll be the responsibility of foreign governments. But in part itâ€™s the responsibility, I think, of big players in the â€œrealâ€ (i.e., non-financial) economy who have a strong interest in ensuring that some new, credible financial institutions come into being or that existing credible ones grow in size and prominence.
This isn’t being discussed enough in the UK, I think. But some institutions are doing very well out of it: Nationwide, for instance. And Cooperative Bank. They’re the ones advertising, and part of their schtick is “look, we’re still here, and we might be unsexy and conservative – but you can trust us.” Suddenly, that’s worth an awful lot.