At first glance, the current credit crisis looks like nothing we've seen before – a real estate crash combined with a derivatives tangle, a record trade deficit and inflation. At its core, however, it's bank failure brought on by deregulation and greed. In that, it's not unlike the Savings and Loan Crisis of the eighties.

Without the easy villains of the eighties insider trading scandals or the sex appeal of the Iran-Contra Affair – which at least had Fawn Hall to spice things up – the S&L crisis has been consigned to the dustbin of history books. But it was a big deal at the time, a taxpayer-funded bailout of banks that failed because government didn't regulate them and common sense didn't guide them. The late economist John Kenneth Galbraith called it "the largest and costliest venture in public misfeasance, malfeasance and larceny of all time." Until now, of course.

The parallels are striking. In the eighties, legislation deregulated S&Ls, just as later laws deregulated mortgage lenders. Then, as now, financial institutions made outsize loans on real estate, which many observers believed would keep rising in value, just as it had been for the past few years. And then, as now, greed and the absence of government oversight created an atmosphere in which fraud ran rampant. The specifics are different – S&Ls contended with fluctuating inflation, and few made subprime loans – but the basic situation is strikingly similar.

So is the government's solution: a bailout. Indeed, many believe that the S&L bailout created what economists call a "moral hazard," a situation in which a person or institution can act irresponsibly since it knows it won't face the full consequences of its action. In this case, banks may have felt free to make risky moves since they suspected the government would save them if they failed. In a perverse way, this is just common sense, so bankers act accordingly. The upside of taking a huge risk is untold riches. The downside is a bailout – and, often, another job.

Yet the government doesn't seem to have learned its lesson. For years, Bear Stearns profited from reckless investments. But when the company's recklessness led to ruin, the Federal Reserve made sure it would be bought by a competitor. So Bear's top executives and clerical workers will probably lose their jobs – but the former have enough money to retire and the latter don't make big decisions, anyway – while the traders who gambled away the company's future will move to JP Morgan. Since they made so much money speculating, it would be foolish for them to change their ways.

It is, however, time for us to change ours.