For four and a half years our leaders have beheld the threat posed by our handful of enormous banks and averted their eyes. Among politicians, this has produced strange forms of denial. Among the public, it has fuelled a deepening cynicism that what we sense to be true – these banks are holding us all hostage – can't be officially acknowledged.

The group I'm involved in, Occupy Economics, has now begun a campaign to break these banks up and make them serve the real economy. Why have those honest enough to challenge the megabanks been either archbishops or technocrats? Sitting on the parliamentary commission on banking standards set up in the wake of the Libor scandal, the archbishop of Canterbury, Justin Welby, confronted the chancellor:

"Big complex banks are not only too big to fail, they are too big to manage, yet … we have heard you continue to defend the idea of a small group of absolutely colossal banks. Is that lack of will to break them up … not simply a recipe for a repetition of disasters?"

Senior regulators will tell you much the same thing. If you listen to them, you'll learn that there is "not so much as a scintilla of evidence of bigger being better in banking". And you'll hear that our big banks consume "eye-popping" state subsidies, sometimes greater than the supposed contribution of their sector to GDP.

Senior Bank of England figures are also apt to observe that the "public interest can diverge from the private interest of a firm in profit maximisation" and that banks need to prioritise the public interest. In Downing Street, Francis Maude has been considering the ownership structure of public service institutions, talking up the potential of mutualisation to make them more responsive and efficient. He has declared: "We all know the dangers of private sector monopolies."

But do we? If you listen to the government, you'd think megabanks were doing us a favour just by sticking around. Suddenly the problem is no longer the structure of the institutions themselves but that of their regulators who, revamped, will assuredly restrain them. Most recently, their criticism has focused not on the structure but only the "ethics" of individual employees, or – above all – "culture", that irksome ghost in an otherwise groovy machine. Government appeasement of the big banks shows how the mood music of economic liberalism can play as defensive apologia for the interests of the powerful.

Yet if Osborne seems already to have decided what the commission's conclusions should be, its members have looked friskier. "If we come out with a code of practice, is that pretty lightweight stuff?", asked one. Pushing their remit, they've discussed industry structure. Welby, especially, has asked some clear-sighted questions. Has the overall contribution of the banking industry to the UK over the past 50 years actually been "positive or negative"? Mervyn King's answer: excluding basic bank services, it's "debatable".

And the commission has been reminded of the limits of regulation. Former Barclays chief Martin Taylor: "I don't believe that regulators can outwit necessarily determined traders. The traffic wardens don't break up the drug cartels."

Yet trying to address "culture" alone is similarly forlorn, like trying to catch a vapour in a butterfly net. Who do you think let the "culture" genie out of the bottle? Trading desks that "infected" the high street banks? Yes, but that wasn't the only legacy of 80s deregulation. Demutualisation left the sector in thrall to stock market pressures, which duly pushed it off a cliff. In 1998 bank shareholders were holding on to their shares for around three years, on average, before selling them on. By the time of the crash 10 years later, it was three months. Public limited company banks are a permanent invitation to cheap risk-taking, then getting out while the going's good.

Successive governments have misunderstood the nature of international "competitiveness" in hosting large, "universal" banks. They aren't really independent institutions at all: they exist to convert public support into private profit. Other things being equal, they go wherever they can extract most value, "just as the larva of the spider-wasp eats out the host in which it has been laid" in Martin Wolf's memorable image.

Are the reforms taken forward by this government sufficient to solve the "too big to fail" problem? To quote Andy Haldane, the Bank of England's executive director for financial stability: "No." (Appearing before the parliamentary commission on banking standards, economist John Kay added: "I would be slightly surprised if anyone really thought they were.")

Rate-fiddling, mis-selling and money-laundering might seem like natural exuberances if your core business is gaming the state. Barclays' new boss, Anthony Jenkins, may have closed the bank's "structured capital markets" tax-dodging unit. But an ex-employee, testifying anonymously to the commission, suspected that many of the bank's "tax structurers" have simply "embedded themselves elsewhere in the business".

Indeed, Jenkins seems stuck between the public and the pressure from many shareholders for a quick buck. He wants Barclays to be "socially useful", yet with equity still at only 4% of its assets, promises shareholder returns in the "high teens" on its UK retail and business division alone. HSBC et al are pursuing similar targets.

Who do they think they are? We're in a recession. They're a utility, not some genius new technology start-up. This is money they're only able to make at our expense – with the NHS budget pledged, in effect, as security for their borrowing. As long as we're letting them get away with it, those guys are making hay while the sun shines.

Let's hope the commission will have sinews stiff enough to take on the banks when it reports in early June. It has heard serious evidence for doing so.