In November of 1999, President Bill Clinton stood at the White House and thanked all the Washington big shots who had made it possible for Wall Street operator Sandy Weill to combine Salomon Bros. with Citibank.

The law Clinton signed erased the Depression-era Glass-Steagall Act, written during the last big-bank crisis to stop it from happening again.

Some in Congress say it is time to bring that old law back.

Glass-Steagall kept commercial banks like Citi, which lend to people and businesses, separate from investment banks like Salomon, which financed deals and speculated on the stock, credit, and commodity markets.

Clinton, echoing generations of big-bank lobbyists, said "the Glass-Steagall law is no longer appropriate to the economy in which we live." Time for tearing down these antiquated walls and granting banks significant new authority.

Clinton thanked the bill's Republican sponsors. He praised "Secretary [Lawrence] Summers and the entire team at Treasury," who are now advising President Obama, and Federal Reserve "Chairman [Alan] Greenspan, for your constant advocacy" of deregulation.

The president called the change "a victory for freedom and free markets," and for "consumer protection."

But by last year, Citigroup and the other big banks empowered by the law Clinton signed were on taxpayer-financed life support.

Citi overdosed on its new freedoms. It pushed its Main Street and Wall Street subsidiaries to make and finance piles of high-interest loans to subprime borrowers, and to trade, package, and leverage those loans. When the markets blew up, Citi lost billions.

The banks are better now. It's the economy that's sick, with 1 in 10 out of work and millions more afraid for their jobs.

Not again

Sens. John McCain (R., Ariz.) and Maria Cantwell (D., Wash.) introduced a bill last week to revive Glass-Steagall and force companies that own commercial banks to sell their Wall Street operations, and vice versa.

"Banks need to be lending to small businesses and homeowners, not fueling risky Wall Street investment schemes," said Cantwell in a statement.

"If big Wall Street institutions want to take part in risky transactions - fine. But we should not allow them to do so with federally insured deposits," McCain said.

Obama, advised by Clinton's old Treasury aides, is against this. House Democrats passed a gentler proposal by Rep. Paul Kanjorski (D., Pa.) that would allow - not require - regulators to split up banks that are so big, so complex, or so risky, that the financial system might stagger if they failed.

But a full-fledged movement to bring back the Glass-Steagall ban could "pick up steam in the Senate" and the House in the next few weeks, Paul J. Miller Jr., a former Federal Reserve Bank of Philadelphia bank examiner who now analyzes banks for FBR Capital Markets Corp., of Richmond, Va., told clients in a report last week.

A ban would force Citi, JPMorgan Chase & Co., and Bank of America Corp. - the three banks that dominate U.S. corporate and retail banking and show the U.S. financial flag abroad - to do investment or retail, but not both.

Citi is already trying to sell some business lines. JPMorgan says it shouldn't have to; it is the most solvent of the three.

Bank of America would have to give up Merrill Lynch - which it bought, in part, at the request of government regulators afraid the giant brokerage might fail.

Who would gain? "Goldman Sachs and Morgan Stanley," investment banks that would no longer have to worry about competition from overgrown commercial lenders, Miller wrote.

Why did banks push to end the ban in the first place? Commercial banking isn't a really profitable business, especially when the government lets anyone with money make cheap loans when times are good.

But Miller says a bank breakup may be in the works even without a new law. "Big banks will likely be forced to downsize anyway," he concluded, "because the regulators will force banks to hold much higher capital levels coming out of this crisis."

At least until next time.

Contact staff writer Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com.