What can be lost in all of this is the big picture: why is Wall Street so sure that things are honky-dory, while Main Street is plagued by anxiety? My guess is that Main Street has started to accept the reality of the past twenty years and has started to change behavior, while Wall Street is content to think it was all a bad dream.
After discussing this at length with people at various financial institutions, it seems that while there was lots of talk of change from last September through March, very little has occurred. Of sure, there are some new regulators and less leverage, but the sad fact is that Wall Street's pain was not sufficient for the self-anointed "best and brightest" to make substantive changes in the way they conduct business. And of course when you are Goldman Sachs, you need not concern yourself with negative press.
In the real world, change appears to be occurring in a big way. No longer is a stock market rally the reason that consumers rejoice about the economy. People are a bit more focused on job losses, wage stagnation and housing woes, than gains in their retirement accounts. For those who lived beyond their means, the jig is up--there's no secondary bubble that will bail them out of this one, so it's back to the ABC's of personal finance: pay off the debt and start saving like crazy.
But that's actually the good news: the pain of this crisis will hopefully be deep enough to encourage consumers to change their ways. I guess Wall Street's pain wasn't deep enough to do the same.