However, neither risk premiums nor funding costs have come back to their 2007 level, and there is no reason to think this will happen any time soon: the market has not forgotten that the crisis was the consequence of its own recklessness. Nor is it desirable that it should happen.
The magnitude of the economic policy response to the crisis testifies to the severity of the trauma. Things will not be the same as before, and all financial market participants, starting with the banks, would do well to recognize this.