Bigwig economist Stiglitz' message to world leaders: still too much risk in banks

A year into the G-20 effort to stabilize global financial markets, Nobel Prize-winning economist Joseph Stiglitz is not exactly giving leaders of the world's major economies high marks. In fact, the professor of economics at Columbia University argues that bank problems are bigger now than they were before the collapse of Lehman Brothers a year ago. "In the U.S. and many other countries, the too-big-to-fail banks have become even bigger," Stiglitz told Bloomberg News during an interview Sunday in Paris. "The problems are worse than they were in 2007 before the crisis."

Stiglitz' view mirrors that of former U.S. Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama to decrease the size of banks. Nevertheless, in the year after the U.S. Federal Reserve and Treasury allocated more than $23 trillion in public funds to stabilize the financial system, re-liquefy credit markets and shore up troubled banks, Citigroup (C) is about as large as it was before the crisis and the Bank of America (BAC) has grown.