It is clear that we presently face only two choices: either the government takes over finance or finance takes over the government. The uneasy separation of private ownership of finance capital with strong government regulation worked for a while, but has proven unstable, even in more "socialist" Europe. The problem is not that heavily regulated finance doesn't work; it works pretty well, at least by capitalist standards. The problems is that it's fundamentally hypocritical. If finance capital really were privately owned, then the benefits of finance capital should necessarily accrue to its owners, not "society", and its owners should have a relatively free hand as to its best management. If, on the other hand, a well-operating financial system really is absolutely necessary to the well-being of the people, then why maintain the fiction that it's privately owned?
We do not say that political power is privately owned by the politicians, the chiefs of police, the generals and the judges. We do not expect a "good" political system to emerge from the private benefit of its managers, administrators and policy-makers. The country will not be stronger because the President has a private stake in, for example, the conquest of Iraq. Why then should we assume with the fervency of a religious zealot that a "good" financial and economic system must necessarily emerge from the private benefit of the bankers and financiers?
What we say and do as a society really does matter. We don't walk around saying that political power belongs to the chiefs of police, and — by and large — the chiefs of police don't come to think that they should personally gain by using their power. There are a lot of abuses, to be sure, but our socialized management of political power must be seen as orders of magnitude better than what we know to be the worst case that can and does exist in much of the world where, "We give you a badge and a gun: what do you need a salary for?" prevails.
If we walk around saying "capital should be privately owned" then a significant fraction of its owners will — despite all popular regulation — come to believe it's the the truth; they will come to believe their private ownership is just and right. The hypocrisy between this attitude and actual political, governmental regulation will rankle their consciences and they will use their power to eliminate the irritation.
We could, I suppose, try to roll back the clock to 1939 or 1945 and try to replicate the efforts of FDR and the post-war political consensus to implement de facto economic socialization using regulation and taxation. It worked then (more or less); why can't it work now?
The problem is that the same social conditions that obtained in 1939 and 1945 don't obtain now. Another problem is that while FDR "New Deal" de facto socialization worked in the short term, it failed in the long term. The New Deal didn't fail easy; it took the Randian capitalists almost 40 years to bring it down, but the hypocrisy proved sufficient motivation to undertake a decades-long effort. We know we must address not just the immediate task of re-regulation and re-socialization, but also break the power of the capitalist class to mount a counter-revolution, even one that takes generations. In much the same sense, it was not enough to regulate the power of the monarchy: we had to break the power of the monarchy to mount a counter-revolution.
Of course, the effort to regulate finance capitalism is even now failing miserably. Despite a Democratic majority and enormous popular support, the government is simply unable to implement even the most basic, obvious financial regulations. We're not even in a class conflict: The Randian capitalists have won the field, and to the victor go the spoils: they will without a doubt run the country into the ground for their own private benefit. Things are going to get worse, a lot worse, before there's even an opportunity for things to get better.
We have to change our ideas. We have to walk around saying that capital belongs not to the capitalists (and not to any party or other self-selected organization) but to the people; that each individual's labor belongs to that individual, and not to any capitalist who can buy her labor power. Hamlet said, "assume a virtue of you have it not." Ownership is a social construct: it is what people say it is. If we start saying that capital belongs to the people, it may, sooner or later, come to be true. If we do not say it, it will never come to be true.