Last week, a bipartisan group of four senators, led by Elizabeth Warren of Massachusetts and including Maine Sen. Angus King, gave some new life to an old idea by introducing a piece of legislation dubbed “The 21st Century Glass-Steagall Act.”

If you’re familiar at all with financial regulatory legislation, then you probably recognize the name Glass-Steagall. It was a landmark law passed in the wake of the 1929 stock market crash and based on a simple premise: The banks that people and businesses rely on for loans, savings and other financial services shouldn’t be allowed to use their deposits to engage in risky financial transactions.

You probably also know that the big banks (which become larger and fewer in number each year as they merge and consolidate) absolutely hate the idea and will fight tooth and nail to avoid having their financial dealings regulated in this way.

King has an uphill fight on his hands, but it’s the right fight for him to take on.

Glass-Steagall was passed nearly unanimously in the House and Senate in 1932 after a congressional inquiry found that a range of troubling practices at American banks had led to the Great Depression. One bank, National City Co., had been taking loans that its customers were likely to default on, repackaging them as securities and selling them to unsuspecting customers under the pretense that they were a sound investment.

Sound familiar?

National City’s successor bank is still around, but it goes by a different name now: Citigroup. It’s one of the largest banks in the world, one of the centers of the subprime mortgage crisis and one of the major causes of the recent economic collapse.

Citigroup’s executives, apparently longing for the glory days of the 1920s, were one of the driving forces behind the repeal of the old Glass-Steagall Act in 1999. In the decades before, Wall Street regulations had been systematically weakened and they had been allowed to merge the commercial banking interests of Citicorp with a brokerage, an insurance company and an investment bank.

To make it all work, they needed to eliminate the last piece of regulation standing in the way of their becoming “too big to fail”: Glass-Steagall. Thanks to the huge lobbying power of this and other financial interests, they were able to successfully push for the passage of the Gramm-Leach-Bliley Act, stripping away the last provisions preventing a regular bank from also engaging in brokerage and financial speculation.

We know what happened next: financial collapse, economic recession, unemployment and hardship for millions. In the end the government had to take responsibility for Citigroup’s bad decisions, taking on debt, buying up its toxic assets and eventually backing the financial giant with a total of $476.2 billion in cash and guarantees, the biggest bailout of any financial institution in history.

Did they learn their lesson? Not according to a congressional investigation of this crisis. In fact, things may now be even worse:

“Very large financial institutions may now rationally decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss,” reads the official report. “Ironically, these inflated risks may create even greater systemic risk and increase the likelihood of future crises and bailouts.”

Some people, especially big bank lobbyists, argue that we don’t need a new Glass-Steagall, as it alone would not have prevented the financial crisis. This is like saying we shouldn’t install sprinkler systems in public buildings because they wouldn’t have prevented the Great Chicago Fire.

Yes, banks will attempt to find a way to make more money through financial speculation, privatizing profits while making taxpayers bear the risk, but that doesn’t mean we should just give up and let them do whatever they want.

Glass-Steagall is still a significant step in the right direction. It may not solve the problem of banks being too big to fail, but by segregating the operations of some of these financial institutions, it would finally start us on the path to making banks smaller and more easily understood and regulated rather than bigger, more complex and more powerful. It would provide Main Street with an important firebreak from the worst excesses of Wall Street.

When Sen. King ran for office last year, he promised to bring people of both parties together to stand up against special interests and bring common sense to Washington. The fate of this legislation, for which there is such an obvious need and which has such powerful enemies, will serve as an important test of that commitment.

Mike Tipping is a political junkie who blogs at MainePolitics.net and works for the Maine People’s Alliance and the Maine People’s Resource Center. He can be contacted at:

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Twitter: @miketipping