The second way in which the current downturn echoes the Depression is the role played by our deregulated financial sector. Now, as then, the financial foundations of our leading banks and other lending institutions have turned out to be made of mush. Now, as then, this news has come as an appalling surprise not just to consumers but to many of the banks themselves. Now, as then, the banks created such complex and deliberately opaque financial vehicles all devised to make them a buck every time they swapped some paper that they long ago lost track of the paper's true value.

In his time, Roosevelt, through the Securities and Exchange Act and other legislation, compelled banks to be both mor...

The second way in which the current downturn echoes the Depression is the role played by our deregulated financial sector. Now, as then, the financial foundations of our leading banks and other lending institutions have turned out to be made of mush. Now, as then, this news has come as an appalling surprise not just to consumers but to many of the banks themselves. Now, as then, the banks created such complex and deliberately opaque financial vehicles all devised to make them a buck every time they swapped some paper that they long ago lost track of the paper's true value.

In his time, Roosevelt, through the Securities and Exchange Act and other legislation, compelled banks to be both more prudent and transparent. Over the past 30 years, however, Wall Street has created a host of new, unregulated institutions (such as private equity companies) and devices (such as the bundled, and bungled, resale of mortgages into ever-larger investment pools). Now it's time to enforce some transparency and prudence regarding financial institutions that have been gambling with other people's money and lives.

When it comes to reining in Wall Street, however, the Democrats have been AWOL almost as much as the Republicans have been not least because their presidential candidates get so much money from Wall Street. By refusing to take on the Street, however, they forfeit what could be a potent issue this fall and lay the groundwork for yet another recession.

This column originally appeared in the Washington Post.