03/18/2010 05:12 am ET Updated May 25, 2011

Re-Regulating the Banks Is Change We Can Believe In

First, if I were in the Obama Administration I would be steaming that that no one seems to care that during their first few months in power they managed to steer the world economy away from almost certain catastrophic ruin. That single act alone had more of a positive impact on ordinary lives than anything done in the previous two terms of the Bush Administration.

Of course, even at the time, entire schools of economists warned that the stimulus was too small, the recovery would be virtually jobless and that there was the potential for obscene profiteering by the biggest and most culpable players. (Note to Paul Krugman: If this whole Princeton/NYTimes thing doesn't work out you could have quite a career as a fortune teller. )

The teapartiers on the right, the Chicago bank protesters from across the political spectrum, ex-Fed Chairmen Paul Volcker and Alan Greenspan all agree on one thing: banks have to get back to banking. Re-regulating them, divesting them of their high-risk investment wings is a bold, simple way to ensure that American homeowners and business owners both small and large, have a stable and adequate access to capital.

The idea would be about as popular with the vast majority of Americans as free milkshakes on Fridays.

The only factions against the idea are the banks themselves, drunk on the sexiness of pretending they're hedge funds (with the salaries that go along with it), and the Democratic and Republican officeholders upon whom they have lavished money.

Breaking up the banks to ensure that never again can the greedy few throw an entire planet into a Depression is not only a logical step but also smart, popular politics.

Beginning with the bailout of Wall Street the Obama Administration has been obsessed with showing Main Street a new kind of Democrat. Gone is the reflexively pro-union peacenik. Obama is a New Democrat, a pro-business, military and fiscal hawk.

Yet there is a world of difference between being pro-business and pro-Wall Street. Wall Street had their chance to play nice after we the people bailed them out with billions of dollars.

Instead they displayed a systemic untrustworthiness and ingratitude. If bailing out Wall Street was the most important (and positive) act yet by the young administration, not then demanding reforms when we had the leverage was its biggest mistake.

Now the road is harder but the need no less. The President cannot talk about "encouraging" them to act for the common good when it's against their best interests. It reminds me of President Bush talking about "voluntary" emissions standards for coal plants. "Pretty please," never works.

The White House has so far distanced itself from this big idea but it is a bipartisan one that, if presented right, would have enormous appeal across the political spectrum. Re-regulating the banks would allow the administration to atone for not asking enough of big banks when we bailed them out, and remind us that his historic election was a victory for all of us.