WASHINGTON (MarketWatch) -- The opportunity is fading for Washington to fix the banking system so it can't threaten the global economy again.

With the financial crisis subsiding over the past few months, the urgency to impose new regulations has also eased. The fears of a global financial meltdown have been pushed to the back of the closet.

We're not going to have another Great Depression this year, so who cares if we're rebuilding a system that's sure to fail spectacularly in the future?

On Tuesday, the Treasury and the Federal Reserve gave 10 large banks approval to repay the billions they got from the Troubled Asset Relief Program last October. See full story.

It's probable that these 10 banks never really needed the money anyway. They were forced to take it, however, because the Treasury wanted to shield the really bad banks.

The thinking was that if we sent all the banks to the hospital for a checkup, no one would notice the stinking corpses of one or two of them.

The plan would have worked fine, except Congress found out about it and figured that crucifying the banks over bonuses, private jets and gold-plated toilets would score with a voting public disgusted by the double standard of billions for the rich and $15 a week for the rest of us.

When Congress threatened all sorts of rules about pay, dividends and lending quotas, the healthiest banks decided they didn't need the money or the grief.

Which leaves us with a three-tiered banking system that's just a ticking time bomb.

At the top, we have J.P. Morgan /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 35.26, -0.13, -0.37%) , Goldman Sachs /quotes/comstock/13*!gs/quotes/nls/gs (GS 149.31, +0.96, +0.65%) , Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 30.98, -0.41, -1.31%) , and others. These big-foot banks don't have to live under the government's special rules, but they do get to take advantage of all the other government programs to get credit moving again. They can borrow money from the Fed for almost nothing, and they can pay billions to their executives and traders from the profits they can make on the carry trade.

They get the bailout buffet style. Pick and choose.

And most importantly, these banks know that the federal government will bail them out, if necessary, no matter what they do, no matter how many stupid investments they make, or how much they pay their executives, traders and shareholders, or how many gold-plated toilets they install. They get trillions worth of government insurance for nothing.

In the middle tier, we have Citigroup /quotes/comstock/13*!c/quotes/nls/c (C 3.41, -0.01, -0.29%) , Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 12.06, 0.00, 0.00%) , Wells Fargo /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 25.66, +0.27, +1.06%) and others. These big banks are struggling to escape the government's icy grip. Until they do, they won't be able to compete with the top-tier banks. Even though they've been able to raise capital, they are still viewed as damaged goods.

At the bottom tier are all the other banks, thrifts and credit unions that just minded their own business but ended up losing lots of money when the big banks took down the economy and sent even good borrowers over the edge. They can't compete on equal terms against the big banks, either.

The Obama administration and the Fed say they haven't given up on re-regulating the banks to make sure they can't put us back into a predicament like this again.

Treasury Secretary Tim Geithner said Tuesday that the administration will provide more details on its re-regulation plan later next week. He insisted that Washington would make sure that the compensation structure within banks will no longer reward people who make reckless go-for-broke bets that the taxpayers might have to pay off.