Lessons the Teacher Forgot

By PETER S. GOODMAN
NYT Week in Review

Back in what felt like the golden age of finance, before the fine print of mortgage documents suddenly became relevant and ordinary people in bars began sharing their worries about credit default swaps, American banking was celebrated as the envy of the world.

Blue jeans and electronics were arriving from factories scattered from China to Costa Rica, and even white-collar jobs were slipping overseas, but the sophisticated work of measuring risk and engineering investments remained the province of the geniuses running Wall Street. Their mastery was more lucrative than ever, and it was emulated around the globe.

So it registered as a comedown last week to read that Bank of America was selling part of its stake in the Construction Bank of China, as it scrambled to secure cash in the face of its real estate-related disasters.

Yes, it has come to this: The largest bank in the United States, putative citadel of free enterprise, must desperately unload shares in a bank controlled by the Communist Party of China. That, or risk the wrath of American regulators, newly concerned about how much money financial institutions have on hand.

(More here.)