You'd think that in the wake of the Great Collapse of 2008, reviving the Glass-Steagall Act would be a no-brainer.
As it happens, there are quite a few powerful members of government who oppose it, including Treasury Secretary Jack Lew, who seems to be pushing Dodd-Frank and the Volcker Rule a little too hard as the only regulation that's needed to keep the banks from making bad bets in toxic derivatives again.
But a little history lesson will show why his plan won't work.
In the wake of the Great Collapse of 2008, it was clear that we needed legislation that tightly regulates the big banks and their investments while encouraging economic growth.
Until the late 1990s, the Glass-Steagall Act of 1933 worked well in maintaining financial stability for decades by placing a wall between commercial and investment banking.
But when Glass-Steagall was repealed in 1999, it freed the big banks to start taking bigger and bigger risks with more and more federally-insured depositor money.
The banks' growth accelerated. When those bets went bad starting in 2007, and in the absence of a wall, the resulting losses spread throughout the U.S. and global financial systems.
After the Great Collapse, Congress enacted Dodd-Frank to forestall future financial catastrophes and eliminate the regulatory creed of bailing out Too-Big-to-Fail banks.
We've had Dodd-Frank on the books now, in one way or another, for two years. Over this period, banks have once again begun to ramp up their risky behavior and have grown even larger than they were when taxpayers bailed them out five years ago.
All this has happened despite Dodd-Frank and the Volcker Rule, which says, "Banks ought not to take risks with depositors' money."
Fortunately, some in Congress realize more needs to be done to protect taxpayers from the banks. Sens. Elizabeth Warren, D-MA and John McCain, R-AZ, recently introduced the 21st Century Glass-Steagall Act. The new legislation doesn't depend on anything like Scouts' Honor to make sure banks don't make big bad bets that they can't cover.
This proposed legislation would rebuild the wall between commercial and investment banking that existed while the original legislation was in place, and should in theory bring the same levels of financial stability that we enjoyed more or less from the end of World War II through the 1990s.
Sounds great, right? So what's the problem? In an administration as "progressive" as the Obama White House, who could possibly be against regulations like this?