James Moore: Hank Paulson may regret his lenient line on bankers

Outlook Talking of banking, and common sense, has no less a personage than Hank Paulson undergone a damascene conversion and joined the ranks of those questioning the financial world's addiction to bonuses?

Well, up to a point. It's taken a while, five years in fact, but Mr Paulson has expressed some misgivings about the vast sums paid out by banks that enjoyed a similarly vast injection of cash from the American taxpayer. Courtesy of Mr Paulson, who was then the US Treasury Secretary having joined the Bush administration from Goldman Sachs, where he was not unfond of a bonus or three himself.

Mr Paulson's argument, in an interview with the New York Times, is that he needed all banks to sign up to his Troubled Asset Relief Programme and that had he imposed restrictions on pay he wouldn't have been able to achieve this. He's now criticised a "lack of self awareness" from the industry (and its leaders) in the wake of the public blowback stateside.

But, Mr Paulson argues, he was faced with a choice between seeking stability, or pursuing accountability for those responsible for creating the crisis. He chose stability. It's hard to deny that the Tarp programme in the US was highly effective in recapitalising the banking system, and the US economy is in a far better state than, say, Europe's. But Mr Paulson, a banker remember, could certainly have pushed harder for both. In not doing so, his legacy goes beyond a resentful public. It has left an industry which has barely acknowledged any culpability for what went on.

Not only have the guilty gone unpunished, they've actually been rewarded. As such, while the US is reaping benefits economically from Mr Paulson's work, behind the scenes problems are festering.

JPMorgan's London whale, who was allowed to rack up billions of dollars in losses, is one example of what this largely unreconstructed industry is capable of.

Mr Paulson believes the root cause of crises is "flawed government policies". That might be partially true. But the last crisis was just as much about a flawed industry model operated by flawed people, people who ought to have been called to account. The US may yet have cause to regret that. And so may we.