Wall Street and the banking industry think the financial crisis is over. The Obama administration isn’t so sure. And that tug of war is playing out in the future of the TARP funds and the lasting value of the recently completed stress tests. The financial industry wants the free market to be the deciding factor again, while the government is holding on to its interventionist ways.
"In 90 days you've gone from an attitude on Wall Street that the financial system is on the precipice to a feeling that happy days are here again," says veteran money manager James Awad, managing director at Zephyr Management. "This is all predicated on the consensus we are on the cusp of growth in the economy, which means the financial crisis is largely over and all we have to worry about is the degree of growth."
Though the Obama administration may not subscribe to that thinking, its policies have helped foster it.
"The stress tests were a great PR exercise, much better than they should have been," says Robert Brusca, chief economist at Fact & Opinion Economics, referring to the government program that examined how financial firms would hold up under worsening economic conditions and how much new capital they would need to cushion their balance sheets.
