It was the biggest bank bail out in British history, and it came with scarcely believable costs. A trillion pounds of tax-payer support; a trillion pounds of lost output. After a disaster of this magnitude you might have expected some collective soul-searching by both banks and government. There has been far too little. Instead we risk a repeat – our banking system is as disconnected from real wealth generation as ever.

The return to business as usual – bonuses, trading in derivatives, the organising of banking as an exercise in which money is made from money – is breathtaking and depressing. And so, given the recent buoyant profit figures reported by our banks, is the easy money.

Labour delivered the minimum reform it could get away with, subcontracting responsibility to the Financial Services Authority. As the crisis broke in May 2008 it commissioned an inquiry populated entirely by industry insiders, chaired by the now chair of Lloyds, Sir Win Bischoff, to examine how the City could become more internationally competitive. When it reported a year later, it recommended little or no change. The conclusions were tamely accepted by the most risk-averse group of senior politicians in the Labour party's history.

The poverty of action is inexcusable. The value of outstanding lending by British banks in all currencies is five times our national output – proportionally greater than any comparable country – and is underpinned by a puny amount of pure equity capital; £1 for every £50 lent. As an internal Bank of England working paper hypothesises, this collective balance sheet structure is so precarious that without substantial and far-reaching reform a second crisis is almost inevitable within 10-25 years. And next time we would be overwhelmed as a country.

Most industries that had undergone such a near-death experience – along with such a high probability of a recurrence – would be taking precautions. Not banking. Instead of building up its reserves aggressively, it is carrying on paying salaries at pre-crash levels. City head-hunter Chris Roebuck, pay consultant Shaun Springer and pay expert Jonathan Chapman confirm that any changes to remuneration are cosmetic; if bonuses have been lowered base pay has gone up. As it is, £6bn of bonuses were paid out last year. As Springer says, the status quo won. The regulators certainly want more prudence over pay, but the banks play cat and mouse with them, as they always have.

As worrying is the lack of reform to the business model of banking built up over the last 10 or 15 years. Barclays, RBS and HSBC each boasts more than 1,000 subsidiaries – most of which are secret vehicles created to warehouse lending or direct financial flows in artificial ways, whose purpose, as one official told me off the record, is essentially deception – to avoid tax or regulation or whose complexity is designed so that in an emergency all a government can do is write a blank bail-out cheque.

The opacity is dramatised by the ongoing multitrillion dollar trading in derivatives – essentially bets on the future prices of financial assets. The justification is that derivatives help buyers and sellers – companies or banks – better to manage risk. Some do. But derivatives are an invitation to speculate. A recent IMF working paper expresses concern that the 10 banks have not backed with the necessary capital or collateral as much as $1.6 trillion of derivatives (£1.1 trillion) they have created – essentially assuming liabilities without the money. Although highly profitable, this is behaviour that fatally weakens the system. The IMF don't say it, but it would just take a market rumour and there would be panic. British banks have £1 trillion wrapped up in derivatives – a business that Nouriel Roubini, the economist who predicted the crash, thinks should be as closely regulated as guns because they are no less dangerous.

But progress on financial reform – nationally and internationally – is glacial. Part of the reason is the fiendish complexity that western governments allowed their banks to create, and part is the jealous defence of alleged national banking interests by governments. But nobody should underestimate the banks' own powerful interest in resisting reform – and their lobbying is powerful and well-financed. One of the oldest and most effective lobbyists, as Stuart Fraser, chair of policy and resources of the Corporation of London, readily admits, is the Corporation of London itself. It has substantial income from a property empire built up over centuries and as the Square Mile's local authority believes it has an obligation to spend part of its funds in promoting its constituents' interests. In this local authority businesses have votes. The Corporation of London has no fewer than four representatives on Bischoff's inquiry – not, as ex City minister Paul Myners concedes, the Labour government's "finest moment".

The status quo is bad news not just because of the risk of another crash. British banks shamefully neglect enterprise, entrepreneurship, investment and innovation. Only 3% of cumulative net lending in the decade up to the crash went to manufacturing; three quarters went to commercial real estate and residential mortgages. Lord Adair Turner, chair of the FSA, says that collectively manufacturers borrow no more than they deposit with banks. De facto, it is a sector from which the banks have largely disengaged. The result – devastated industries and sky-high property prices.

Reform has to be multi-pronged. Almost everybody accepts that banks need to carry more capital, except getting international agreement on how much is close to impossible. And banks should indicate how in a crisis they would wind themselves up without costing the taxpayer billions – so-called living wills. The question is how much more should be done.

Paul Volcker, former chair of the US Federal Reserve and presidential adviser on banking, told me that banks should not trade on their account in derivatives. Tory MP David Davis's cross-party banking commission, which has just released a comprehensive report, endorses the view, and so do many Bank of England officials, at least privately. There should be much more transparency; living wills, for example, should be public documents rather than secret arrangements. So should derivative trading. There should be a great deal more competition. The government, according to the new business secretary Vince Cable, needs to get tough and insist that banks lend to enterprise.

Britain needs more banks, transparent banks and safer banks that really contribute to the British economy – and it needs to have the chutzpah to go it alone if necessary. The coalition government, Cable says, is committed to change, and a banking commission to investigate what and how is about to be announced. The question is whether anyone will have the courage to do what needs be done.

Dispatches: How the Banks Won, presented by Will Hutton, is broadcast at 8pm this Monday on C4