The end of a gilded age

By Steve Fraser

What is Washington to do as the financial system collapses? Clearly, stark differences in approach as well as in public policy have already emerged. Bail-out Bear Stearns and pump up the brokerage and investment business with new lines of credit. Nationalize Fannie Mae and Freddie Mac on the backs of the taxpayer - but let Lehman drown.

Tell the financial community to save itself, after which Bank of America salutes and buys Merrill Lynch. Then, the Federal Reserve gets cold feet and decides it can't let an institution the size of the insurance giant AIG go under as well. Washington is left staring into the abyss. The old rules no longer apply.