How quickly “never again” turns into “so what’s the problem?” Bloomberg’s Alex Barinka and Whitney Kisling earlier this week reported that finance is poised to regain its place as the biggest single industry in the S&P 500 index since the 2008 crash. The chart that appeared with the story on Bloomberg’s professional terminals didn’t make it to the web. It’s worth looking at, so I’ve reproduced it above. Financial companies are the yellow line (tech is white). Banking and finance now make up 16.8 percent of the index.
Is this a problem? It depends in part on what you think drives the financial industry’s market value. If you believe that the industry’s profits depend largely on a cushion of too-big-to-fail subsidies, then it is. If you see the rise of the financial sector as a reflection of American comparative advantage in providing financial services to much of the world, then it’s not.
Either way, one thing the chart reflects is the market’s appraisal of banks’ exposure to government sanctions and restrictions. The economy may not have fully recovered from the storm of the crash, but the banking industry seems to have nicely weathered the gale of calls for greater regulation.