Geithner disputes this, of course. “We may sometimes look like it,” he told me, “but the United States is not an emerging market.” The disagreement over reform comes down to a difference of opinion about whether the United States’ economic and financial predicament really is as bad as that of an emerging market, or whether it’s bad, but not so bad that the banks need to be broken up. Geithner convinced Obama—and Volcker has not yet convinced him otherwise—that modesty is the best policy.

What can’t be disputed is that the decision to focus on risk management rather than size carries the same political disadvantages Geithner’s plan for recovery did. By allowing Wall Street’s major institutions to continue unmolested—even as they exploit the government’s guarantee by paying themselves huge bonuses—the administration appears weak and indulgent, and deaf to the public’s desire for retribution. When Obama introduced the Volcker rules and started talking about wanting to pick a fight with Wall Street, he was at last succumbing to this pressure.

The depressing coda to all this is likely to be financial reform that falls short of even Geithner’s plan. Partly this is because the administration didn’t challenge many of the constraints that were already in place. But mostly it is because even the biggest crisis since the Great Depression hasn’t changed Washington’s ideological outlook nearly so much as it has everybody else’s. Three decades’ faith in deregulation and the power of the market makes a lasting impression. Most members of Congress have enough political sense to criticize Wall Street bankers. But meaning it enough to push tougher reforms is still regarded as slightly unsophisticated, as the handful of congressmen who’ve tried can attest.

Before passing the administration’s plan, the House weakened oversight, carved loopholes for derivatives trading, and cut commonsense measures like one requiring financial firms to offer “plain vanilla” alternatives to complicated (and profitable) products like mortgages. The Senate seems poised to weaken things further. All of this happened as a wave of anger was gathering force. When it broke, with the Republican victory in Massachusetts, it seemed to finally sweep away some long-held illusions, causing many Democrats to realize how sharply at odds their beliefs are with popular sentiment. Only now, too late, are those beliefs beginning to ebb.

The economic recovery has eased the urgency for reform that existed a year ago. Even if the administration changed course and pushed for strenuous measures, Obama and Geithner probably lack the credibility to pull them off. What successes they’ve achieved are obscured by high unemployment and anger at Wall Street, reflecting the inadequacy of their stimulus and the fallout from their recovery and reform plans. “We managed the economic recovery like we were investment bankers,” a senior adviser to Vice President Biden complains. What chance there may have been for tough reforms came early in the crisis, when public anger was peaking and banks were weak, and any such reforms probably would have required someone other than Geithner, the face of the bailouts, as their champion.

Geithner doesn’t breed nuance of opinion. You’re either for him or against him, and popular sentiment leans strongly toward the latter. But it’s possible to view him as someone who was indispensable in halting the crisis (his understanding of Wall Street’s psychology was particularly valuable) while still doubting whether someone so steeped in the institutional cultures of Washington and Wall Street has the necessary distance to direct their reform.

The angry uprising that stopped the Obama agenda in its tracks is part of the steep political cost of following the Geithner Plan—a cost that seems to keep rising, even as the fiscal cost continues to fall. Even the most prominent indicator of recovery, the robust stock market, has come to seem a curse, by reinforcing in the public mind how quickly Wall Street has recovered while everyone else is left to endure. And Obama can’t really tout all that he’s done without also drawing attention to his gentle treatment of Wall Street.

Depending on your point of view, this is either a cruel or a fitting irony. By placing his chips on Geithner a year ago, Obama was betting that a strategy of growth under any circumstances was the right move, and that devising new rules was best left to insiders. But even Geithner isn’t sure that the public will come to see it that way: “In the end, what people care about is, what did you do? Did it make things better or not? That’s what you’ll be judged by. Now, will it vindicate the president over time? It should, but I’m not sure it will. I think probably not. The country is dramatically better off today. People say the financial strategy was politically costly for us. And I say to them, relative to what? Would it have been better to have the stock market where it was in March, the economy still falling, and unemployment much higher?”

History may yet judge Obama favorably. But it's entirely conceivable that the economy could outperform everyone's expectations of a year ago and voters will still punish him and his party. And, in fact, it appears ever more likely that that's exactly what's going to happen.

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