Wall Street's woes are making it less likely that Washington will take up major climate legislation anytime soon—and that's not just because lawmakers are spending all their time focusing on the economy. Banks like Morgan Stanley and J.P. Morgan have long been among the most ardent and influential supporters of setting up a cap-and-trade system for carbon emissions, since they stand to profit greatly from the opening of a new commodity market in pollution permits (estimates of the value of the new market are as high as $3 trillion). Now, though, with an enormous question mark hanging over their own futures, the Wall Street giants' support for a carbon-trading scheme may well become more tepid.

Still, there are reasons to be guardedly optimistic. Several states out West have just teamed up with four Canadian provinces to reach a significant new climate agreement, the Western Climate Initiative, which calls for a 15 percent reduction in greenhouse-gas emissions among member states by 2020, using a cap-and-trade system to enforce the cuts. Out in the Northeast, meanwhile, today marks the the opening of the country's first carbon-credit auction, as the Regional Greenhouse Gas Initiative—encompassing ten New England and mid-Atlantic states—officially goes into effect. These regional plans, while not without their drawbacks, could pressure Washington into picking up the pace on crafting a national emissions reduction program—even if Wall Street's no longer pushing quite as hard.

--James Martin