(This post previously appeared at HuffPo)

Both the United States and the United Kingdom have had a coordinated non-response to financial reform. If a drunk driver killed your neighbors and crashed the car into your house, you wouldn't expect a police officer to hand the offender a bottle of whiskey and the keys to a bigger, faster, and more powerful car. You would be outraged if the officer said he would only impose a fine, and then made you lend the drunk the money to pay the fine. Yet this is the modus operandi of our financial system, and now financial drunk drivers refuse blood tests and huff that their seat belts were fastened.

Both Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner missed the critical warning signs of our recent financial crisis. In April of 2009, Steve Forbes called Geithner "the most formidable impediment to an economic recovery." Ben Bernanke repeats past mistakes and hands out cheap money with insufficient conditions or regulation. Both economists have been economical with the truth. There were alternatives to their actions during the crisis that are based on sound financial principles and do not violate the spirit of democracy.

President Obama has proposed a baby step towards financial reform. He proposes to limit ill-defined proprietary trading, limit banks' borrowings, and prevent banks from investing in hedge funds and private equity funds. Banks' lobbyists and PR spin-doctors are already working overtime to thwart him.

Mainstream financial media got it badly wrong when it said that the proposal was based on populist anger. It may have motivated President Obama to (only partly take) Paul Volcker's advice, but sound financial principles back that advice.

Some bank stocks fell in price after the President's remarks yesterday. That was because savvy investors knew that speculators might no longer be able to report high risk-based earnings subsidized with taxpayer dollars. In this case, a fall in stock prices for banks driving down Wall Street should be viewed as a healthy sign. A few bank stocks rose, because they rely on traditional banking backed by sound financial principles.

Goldman Sachs's stock went down a few percentage points. It became a newly created "bank," to get on the taxpayer give-away gravy train. JPMorgan Chase claims only 1% of its revenue comes from proprietary trading, yet even before its merger with Bear Stearns, JPMorgan's market share of credit derivatives was greater than 50% for U.S. banks. That meant you could combine the credit derivatives of all other domestic banks, and JPMorgan's positions were greater. Those are just two examples. Banks' "non-proprietary" trading desks are often invisible hedge funds.

Taxpayers currently subsidize banks with cheap money supplied by the Federal Reserve. Even banks that nearly crashed our economy borrow at nearly zero interest rates, while some consumers pay nearly 30% on credit card debt.

Banks enjoy a Term Asset-Backed Securities Loan Facility (TASLF) that allows them to borrow against problem assets. New banks have each issued tens of billions in FDIC guaranteed debt through the Temporary Liquidity Guarantee Program (TLGP). Banks get interest payments on the excess reserves they keep with the Fed. Accounting rules were changed in March 2009, so banks make up their own prices for assets and more easily hide losses. These are only a few of many newly-created hidden subsidies.

Taxpayers are paid only peanuts in fees for these massive subsidies while being squeezed with high interest rates and mortgage foreclosures--after our economy was devastated chiefly by several banks' malicious mischief.

What has the financial crisis taught us? Among other things, we should show Bernanke and Geithner, enablers from the previous administration, the door. Paul Volcker is right to ask for a return to Glass-Steagall. It worked until it was eroded over several decades by bank lobbying. Banking and speculative trading activities--even when done for "customers"--don't mix.

"Financial innovation" must be limited, since much of it in recent years was the financial equivalent of card cheating. Banks should not be allowed to sponsor hedge funds and private equity funds, and furthermore, they should not be allowed to lend to them through prime brokerage units or other means. Financial institutions must be allowed to fail. Hedge funds require regulation. Malfeasance should be investigated and prosecuted. Credit derivatives should be traded and cleared through exchanges and made transparent. Compensation and financial incentives at banks must change. Bank employees cannot continue to reap huge rewards at no personal risk while shoving risk into the global financial system.

President Obama promised us change, and he should seize this opportunity to demand sweeping financial reform.