“The banks have fought their war against financial reform on four fronts.

“They have pushed for delays, lobbied allies in Congress to repeal aspects of Dodd-Frank, worked over regulators to make the rules as loose as possible and threatened legal challenges and filed lawsuits.

“The battle has been overwhelming, with a scrappy band of pro-reform rebels outnumbered and overpowered by the empire’s resources. The public appears to be on the side of the insurgents, but perhaps can’t follow or understand debates about whether “swaps” — what are those? — should be “pushed out” or not — what’s that? (English translation below.)

“During all of these fights, the banks have had a stalwart ally holding back greater reform: Establishment Democrats.

“Such Democrats, the Robert E. Rubin wing of the Democratic Party, opposed moves to break up the big banks after the 2008 global crisis. These stalwarts prevented a reinstatement of the Glass-Steagall separation of commercial and investment banking.”

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“Republicans will seek to loosen the Volcker Rule, which bans banks from speculative trading with money backed by government insurance. They will fight regulators’ ability to curtail systemic risk in the financial system. They will try to make it easier for corporations to sue regulators for overreach.

“Battling over each provision is the least favorable terrain for the pro-reform crowd. In a series of conversations I’ve had recently with Democratic strategists and reformists, an alternative is clear: Go big. President Obama and his administration could argue clearly and publicly that the banks have not learned their lesson from the financial crisis. That they have obstructed the reform process. That they are so big, they can buy the political process. That because of this, the financial system is once again in danger. President Obama could then call for real reform — this time, a significant overhaul of our financial system.

“Framed like this, the fight over last year’s budget bill can be seen for what it was: a tactical defeat, but a strategic victory. Financial reform proponents, led by Senator Elizabeth Warren, Democrat of Massachusetts, exposed a back-room deal whereby the leadership of the Democratic Party sacrificed a provision of Dodd-Frank — one that the Obama administration never supported anyway — in exchange for budget harmony. Democrats were forced to make an uncomfortable vote.

“The swaps push-out fight was very helpful to get people engaged — elected officials, administration and others — as to coming threats,” said Dennis M. Kelleher, the chief executive of Better Markets, a financial reform group. The banks “put swaps push-out over funding defense, homeland security, funding epidemics. They were willing to crash funding for the entire government for their special-interest provision.”

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Read the full New York Times article by Jesse Eisinger here.