Before Hurricane Katrina in 2005, the state of Louisiana asked the Bush administration several times to fund the Southeast Louisiana Urban Flood Control Project, resources that would have gone toward building up drainage and flood-protection infrastructure in New Orleans. Instead, the federal government cut its funding every year, starting in 2002. A January 2005 memo from the Office of Management and Budget (OMB) denied the project's last request before the storm, explaining that flood protection was not one of the administration's priorities; at the time, "fighting the War on Terror," "strengthening our homeland defense," and pro-growth economic policies took precedence, the OMB explained.

The heads of the European Union are meeting in an emergency summit to try to resolve the Greek debt situation. But the best they are likely to manage is a temporary fix. A tentative plan agreed to yesterday by French President Nicolas Sarkozy and German Chancellor Angela Merkel is to be presented to the summit this afternoon. But it is unlikely to resolve the long-term structural problems.

Various news sources, including The Wall Street Journal and Bloomberg have been reporting that Treasury Secretary Tim Geithner has advised President Barack Obama that he is likely to step down once the debt-ceiling extension is approved (that might be a long time from now given that the Republicans could agree to temporary extensions to maximize their leverage).

Here comes Financial Crisis 2.0. Like its predecessor, it was caused by the banks.

The first crisis was the result of banks inventing toxic financial products and then promoting bets on different kinds of securities with borrowed money. When the speculative bubble popped, tens of trillions of dollars in financial and housing assets vanished. At that point, governments and central banks stepped in and rescued the banks. The only thing that suffered was the rest of the economy.

On Wednesday, three federal regulators -- the Federal Reserve, the Office of Thrift Supervision, and the Office of the Comptroller of the Currency -- released an enforcement order against 14 of the nation's largest banks and two third-party service providers for persistent irregularities and outright fraud in the way they process mortgages. These regulators are, respectively, the gang that missed the housing bubble, American International Group's overseer (whose colossal lapses caused it to be disbanded in last year's financial-regulatory law), and an entity most recently headed by a former bank lobbyist.

Treasury Secretary Timothy Geithner is close to a decision to exempt the $4 trillion-a-day foreign-currency market from key provisions of the Dodd-Frank Act requiring greater transparency in the trading of derivatives. In the horse-trading over the final conference version of that legislation last year, both Geithner and financial-industry executives lobbied extensively to give the Treasury secretary the right to create this loophole. As the practical reach of Dodd-Frank is defined by the executive branch, this will be the first major decision to signal whether regulators will act to strengthen or weaken the reforms.

Last June, Thomas Cox, a legal-services lawyer representing a Maine homeowner named Nicolle Bradbury, took an extended deposition from a clerk for the mortgage giant GMAC, which was trying to foreclose on Bradbury's house. GMAC, once the financing arm of General Motors, received a $17.3 billion bailout in 2009 and became 56 percent government -- owned. The clerk, Jeffrey Stephan, admitted that he signed over 400 affidavits a day attesting to documents that were supposed to be in files but were not. The case brought to light a widespread industry practice known as robo-signing.