With thousands headed from around the city and around the country to march on the American Bankers Association at the Sheraton Hotel on Tuesday, Dave Roeder writes that he’s seen the light:  big banks pose such a risk to the economy that they are akin to a “national security risk.”

“Just as the nation emerges from a recession brought about by crazed extensions of credit and mortgages, which led to bundling loans into derivatives that even the bank executives didn’t understand, along they come with new financial inventions, any of which could precipitate the next crisis….

“Wall Street’s bonus-driven banks are back to living dangerously just months after requiring federal bailouts. The same industry that inflated the market bubble in 2001, hyping recommendations on technology stocks that had no chance at profits, is at it again because it believes the ‘too big to fail’ argument lets it have its own rules. This is the same business that whipsaws Americans with credit card penalties, jacked-up interest rates, subprime mortgages, foreclosures, bank account fees, bounced check fees and a mergers and acquisitions practice that has eliminated good jobs in the United States and destroyed shareholder value. How much more do people need to take?”

President Obama’s new regulatory agency to protect consumers “has gone nowhere against a horde of lobbyist cash,” he writes. What’s needed?  “Break up the big banks,” says Roeder;  reinstate Glass-Seagell.

Instead, in last year’s financial meltdown, the feds helped too-big-to-fail institutions get bigger by taking over other huge, troubled institutions, and giant investment banks were given government guarantees afforded  more conservative bank holding companies.

One particular target of protestors is the bank lobby’s efforts to block regulation, and recently Joe Nocera at the New York Times spoke with ABA president Edward Yingling on just that subject.

With the consumer protection bill, the ABA has succeeded in blocking a “plain vanillia” product requirement that basic products be offered alongside exotic ones, as well as a reasonableness standard which would force sellers to make sure consumers understand and can afford the products they purchase.  And “despite its success in reining in the proposed agency,” the ABA “is still lobbying fiercely against it.”

Nocera takes on the ABA’s argument that the financial collapse was the fault of non-bank financial institutions, not banks, and that new regulation should target the former and not the latter.  And that the task can and should be left to existing regulatory agencies.

“Who do you think was creating all those subprime mortgages that the brokers and originators were peddling? The banks, that’s who.”  And it was the banks that were pressuring mortgage brokers to sell more option ARMS and no-doc mortgages, so the banks could bundle the loans into securities and sell them on Wall Street.

“Even now, banks are engaged in practices that are, at best, dubious, and at worst deceptive,” he says, citing “rapacious debit card overdraft fees.”  Not long ago,  debit card holders would be blocked from making a purchase with insufficient funds; now exorbitant overdraft “protection” is offered, whether asked for or not.

Last week the House financial services committee approved the consumer protection agency bill in much-weakened form (though under pressure from fellow Democrats, Rep. Melissa  Bean, D-8, was forced to withdraw an amendment preempting state consumer protections).  The Woodstock Institute reports “advocates are hopeful the bill will be strengthened in the Senate.”