Yes, we have to rethink how the financial system is set up. Most of the thinking is along these lines:

Democrats are advancing proposals in Congress designed to limit the size and complexity of financial companies so that any collapse wouldn’t damage the broader economy, a sign that lawmakers are responding to anti-Wall Street sentiment by toughening the administration’s rewrite of finance rules.

The proposals would allow the government to break up healthy financial companies, and in some cases, would reassert rigid demarcations within finance that were cleared away in 1999, such as barring commercial banking firms and investment banking firms from merging.

   It seems to me that the language being used here is limited–and shows  the limits of the debate. The real question is not simply one of rethinking the system so we can prevent or manage a future collapse. The real question is: what kind of financial system benefits the people most?

   I would suggest that part of the reason we got into the mess last year was a natural outgrowth of a system that cared less and less about the small business down the street or the individual looking to get a home loan. Rather, massive financial institutions cared only about making a profit and were quite happy to be focused on currency fluctuations or trading in derivative markets half way around the world. If we reconstruct the financial system to favor smaller institutions and, in particular, regional and community banks, we’d do ourselves a favor.