Wall Street’s historic district, with the New York Stock Exchange on the right and the JP Morgan & Co. building on the left. (CC Photo from epicharmus’ Flickr account.)

In today’s Wall Street Journal, Simon Johnson explains what three new books about the financial crisis tell us.

(Simon Johnson is co-founder of the blog BaselineScenario, co-author of “13 Bankers,” to be published in April, and a professor at MIT’s Sloan School of Management.)

Wall Street executives “won,” Johnson said. They “kept their jobs, their bonuses and their pensions; they benefited from unprecedented rule changes and unlimited monetary and fiscal support; and their firms became even bigger and more dangerous to the economic health of society.”

Johnson explains that Andrew Haldane, head of financial stability at the Bank of England, “has become blunt about the way our banking system interacts with (and rips off) taxpayers.” Johnson quotes Haldane in a recent paper:

The government may say “never again” to bailouts, but when faced with the choice to either “rescue big banks or allow the world economy to collapse,” it will reasonably choose the route of rescue. But, knowing this, the people running our biggest banks have an incentive to take more risk — if things go well, bank executives get the upside, and if there’s a problem, the taxpayer will pick up the check. If a financial sector boss wants greater assurance of a bailout, he or she should make bigger and potentially more dangerous bets — so the government simply cannot afford to let that bank fail.

This, Haldane argues, is our “doom loop” — big banks know they can get away with the same behavior (and more) again, and we are doomed to repeat the same boom-bust-bailout cycle. A long time ago, President Andrew Jackson’s private secretary, Nicholas Trist, described the Second Bank of the United States, the last financial institution to seriously challenge the power of the president, thus: “Independently of its misdeeds, the mere power, — the bare existence of such a power — is a thing irreconcilable with the nature and spirit of our institutions.” Unless and until we break the political power of our largest banks, the middle class will be hammered down. Whose taxes do you think will be raised to reflect the costs of repeated financial shenanigans? The financial sector will become even richer and more powerful. If you didn’t like where inequality in the United States was already heading, wait until you see the effects of this recession.

The most significant result of the financial crisis is the emergence of six large banks that are undoubtedly too big to fail and therefore enjoy a strengthened government guarantee; Goldman, JPMorgan, Citigroup, Bank of America, Wells Fargo and Morgan Stanley are the beneficiaries of the doom loop. The most significant non-result is the fact that no comprehensive legislation has yet been passed to reform the financial sector. Without really serious reform, we have every reason to start counting down to the next financial crisis.