IDEAS: Are you in the same boat?

GORTON: My PhD thesis was on banking panics almost 30 years ago, and all my research also has been on banking panics, and I was a consultant to AIG financial products for 12 years. I was there. I saw it.

IDEAS: You’ve argued that we need a whole new category of banks, with their own collateral rules. It’s been four years. Why don’t we have them already?

GORTON: We didn’t figure out fast enough what had happened, and it was difficult to disseminate the information so legislation was hurried. The legislation, Dodd-Frank, happened before the Financial Crisis Inquiry Commission had finished.

IDEAS: Do you expect we’ll get this type of regulation in time to prevent the next crisis?

GORTON: I’m not particularly optimistic, no. In the book I talk about what I think are the most important legislative successes in financial history in the US. That is deposit insurance and before deposit insurance the National Bank Acts, passed during the Civil War. And neither of these acts was passed because people carefully considered them and thought they would be good ideas. The National Bank Acts were passed to help the North finance the Civil War, and deposit insurance was passed as a populist demand.

IDEAS: Are you discouraged by the lack of progress so far?

GORTON: On the one hand, it’s kind of depressing that we had this huge disaster and what we got out of it was a book by Michael Lewis, and not a lot else. On the other hand, historically it takes a lot of time for ideas to sink in.

IDEAS: President Obama, who campaigned in 2008 as a Wall Street reformer, has been reelected, and just this month Federal Reserve Board Governor Daniel Tarullo called shadow banking regulation “the most important remaining task of financial regulatory reform.” So now will we see action?