More than two years have passed since the eye of the financial storm hit, and banks are not yet done picking through the debris, trying to determine what about their business models is salvageable and what needs to be replaced.

A muddled outlook on the economy and extraordinary intervention by the federal government in the capital markets have made the task of figuring out "the new normal" all the more difficult, according to three analysts who participated in an American Banker roundtable in May in New York.

"One of the things that I'm trying to figure out is what the banking model is going forward," said Paul Miller, an analyst at FBR Capital Markets, echoing the concern across the industry.

"Before QE1 and QE2 a bank added value by cheap deposits," he said, using the shorthand for the Federal Reserve's economic stimulus programs. "Anybody could give a loan. The loans were all standardized. You had to have the branch presence, you had to have the lender presence. … But it was who could supply the best funding. Those were the banks that were the best, most profitable banks. Now you flip that. Everybody has got deposits. So has that comparative advantage switched away from deposit gathering to actually putting good loans on the books?" That's a completely different model, Miller said.

Interest rates have hovered near zero since late 2008, making spread income hard to come by. At the same time, the fees banks earn on other services have been constrained by new regulation, leaving companies scrambling to find ways to expand their business. All the while, they must navigate an unrelentingly stubborn economy. One week unemployment rises, the next it falls. The same can be said for housing prices, home sales and mortgage rates.

Just last week, for example, a report showed that new-home sales rose more than expected in April, while another report showed that initial claims for unemployment benefits rose in the prior week, when economists had been expecting a decline. Separately, the government reported that consumer spending grew at an anemic pace of 0.1% in April, when adjusted to exclude price fluctuations. But analysts said that is par for the course after such a tumultuous time.

"We're going through a transitional period between the recessionary period and expansionary period," said Peter Kovalski, managing director of financial institutions at Alpine Woods Capital Investors LLC in Purchase, N.Y. "During this period you will get ebbs and flows where you may have some strong economic data followed by weaker economic data. I think this is probably not out of the norm during a typical economic cycle."

However, the period of ups and downs has been prolonged by the federal government, Kovalski said.

"The Fed is being much more manipulative in the capital markets than they have in the past," he said. "That's actually been a detriment to getting the economy turned around, not a stimulus."

Miller didn't see it quite that way.

"We looked down into the pits in 2007 and 2008. We didn't fall in. I think that was because the government did take the correct actions," he said. "But now we have to live through those actions, which are going to take a long time. … We're just going to be bouncing around." Miller projects the transition period will last another three to five years. But even then, much is dependent on the housing market.

"I just don't think we get out of this muck until we deal with all these foreclosure problems," Miller said.

One point the analysts could agree on is that more needs to be done to encourage private investors to come back into the housing market.

"There are companies out there that can buy slugs of homes, two, three, four hundred and then property manage them and rent them out," Miller said. "They're being kept on the sidelines because of all these other policies" that favor owners who occupy the home. "In the '80s there was a lot of investor-related programs, which have been pushed to the side because we want people to own their own home, which is what got us in this trouble to begin with," he said.

Banks have the political capital to fight for incentives to bring private investors back into the housing market, the analysts said. The problem is banks are too busy dealing with all the foreclosed properties on their books to consider how to get private investors involved.

"I have not heard of them or talked to them about actively trying to get investors involved," Miller said. "They're just so overwhelmed they're just trying to make it to the next day."

The government has also played a role in widening the chasm between big and small banks, the analysts said. Small banks are taking the brunt of the government's crackdown on lending practices that went awry during the boom and new regulation requiring higher capital levels, they said.

"There are concentration issues with what percentage of capital they're allowed to allocate towards commercial real estate," said Anton Schutz, the president of Mendon Capital Advisors Corp., a Rochester, N.Y., investment advisory firm focusing on the financial services sector. "Well, in a little community, that may be the only way to create some collateral and create some velocity. JPMorgan [Chase & Co.] may not be in that little community making those loans. I think there are some real issues here. Some of it is definitely driven by regulatory overzealousness."