Nov. 8--Ignoring British example, Obama wants to prop up financial behemoths.

As Alan Greenspan, the former chairman of the Federal Reserve, put it, "If it is too big to fail, it is too big." Paul A. Volcker, another former chairman of the Federal Reserve, thinks a new version of the Glass Steagall Act, repealed in 1999, should be enacted to separate commercial from investment banking. Commercial banks would stick to the less risky business of managing money rather than again blowing up the world's financial system by engaging in highly risky, speculative trading.

The Obama administration has ignored the advice. The legislation it is pushing would make "too big to fail" official government policy, guaranteeing that the next financial crisis will be a catastrophe surpassing the current great recession.

Financial institutions have gotten bigger as they have taken over collapsing and failed banks and financial companies whose leaders ran them off a cliff by taking risks they didn't understand. Bank of America, Citigroup and JP Morgan Chase now control one third of the nation's banking and investment business. Only JP Morgan Chase is in sound financial health.

Volcker's proposal would mean that Bank of America would have to disgorge Merrill Lynch and JPMorgan Chase would have to divest Bear Stearns. Keeping their speculative trading bets under the banks' wings increases the risk of a future crisis.

The Obama administration should push for again separating commercial from investment banking. It has the power now to insist that Citigroup be broken up. The government owns a large portion of the sprawling financial conglomerate, which remains on life support from Washington.

Instead, the White House wants to maintain these behemoths and act only after the fact if one fails again. By then, it will be too late. The White House policy has hurt small banks that were not bailed out and that pay more to borrow from the Fed, while the government backstops risks -- like $300 billion in toxic assets at Citigroup -- taken by the big banks.

Ben Bernanke, chairman of the Federal Reserve, and Timothy F. Geithner, secretary of the treasury, insist these financial giants are needed for the U.S. to be competitive in the global economy.

The Bank of England has a different view. It is forcing the United Kingdom's two biggest banks, Royal Bank of Scotland and Lloyds Banking Group, to sell large parts of their operations in exchange for further government aid. Another British bank, Northern Rock, is being broken up, with assets sold to new companies to increase competition.

President Barack Obama should pay more attention to how Britain is dealing with its banking system and less attention to Wall Street's demands for business as usual.

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