The administration that promised change we can believe in and the highest level of transparency in history now delivers “too big to fail” banks - bigger, more complicated and secret than ever.

First, the Obama administration and the Democratic majority in Congress continued policies that assured a number of large financial institutions that taxpayers had bailed out after the financial collapse got even larger and more powerful.

Now the administration and congressional leadership have proposed a scheme that leaves the big banks in place, with a regulatory scheme that provides more questions than answers, with secrecy that treats the banking system like a CIA covert operation.

If you’re wondering, these big banks are the same financial behemoths whose reckless behavior and Byzantine bookkeeping brought the world to the brink of ruin.

Then in the midst of the crisis, the federal government stepped in and forced the mergers of several of the survivors, creating even larger firms.

The president and the chairman of the House Financial Services Committee, Barney Frank, have launched a proposal to address how to regulate “too big to fail” banks, and how to deal with such institutions when they fail.

But after their legislative proposal was met with a flurry of criticism, the congressman backed off of some of its provisions and promised to change them.

Frank said he now disagrees with the administration on how best to pay for such failures when they occur.  The administration would have taxpayers foot the bill for future bailouts, with  complete reimbursement from surviving banks.

Frank favors creation of a fund in advance, paid for by big banks, to pay for bailouts.

As for transparency, the administration’s plan would allow regulators to continue to operate out of public view. In one key provision, the proposal envisions creation of a council of regulators, which would identify those institutions that are so large and intertwined that their collapse could threaten the economy. But they would keep the list secret.

Frank has now pledged he will preclude such secrets.

But on one key issue Frank is still in lockstep with the administration: “too big to fail” banks must remain in place, at the heart of our economy, in their present form.

Lots of prominent economists don’t agree, including several members of Obama’s circle, such as Paul Volcker, former head of the Federal Reserve, who has called for much stricter limitations on the activities of the biggest banks.

On the outside, the economic guru Alan Greenspan, whose policies at the Federal Reserve helped inflate the bubble, has seen the error of his ways and now advocates breaking up the biggest banks. “If they’re `too big to fail’, they’re too big,” Greenspan said last month. “In 1911 we broke up Standard Oil – so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.” Unwinding the megabanks would be difficult but not impossible, either through government action, or through taxes or incentives to get the banks to break themselves up. For example, Public Citizen’s president, Robert Weissman, suggested to Congress the government should use antitrust law to break up the banks and reinstitute the Glass-Steagal Act, the Depression-era law that separated traditional banks from investment banks and other institutions that engage in riskier practices. That law was repealed in the anti-regulatory fever that spread in the late 90s. A Republican-majority Congress passed the repeal after 20 years of financial industry lobbying. A Democratic president, Bill Clinton, signed it into law. Breaking up big banks would require great political will, because of the tremendous power these institutions have amassed along with their size and wealth.

Keeping these banks in place is neither easy nor cheap. But the deeper question neither Obama nor Frank is asking: why do we need them?

As Simon Johnson, MIT professor, former IMF economist and blogger has pointed out, most of the contemporary banking innovations that have helped the economy or consumers, such as venture capital, ATM cards and credit cards, grew out of the tightly regulated, staid days of banks after World War II. Those innovations are “much more helpful than anything you’ve seen since 1980,” Johnson wrote in September.

If megabanks offer economies of scale, they’re not readily apparent to consumers, who face ever-increasing fees, tighter credit, bewildering rules and deteriorating customer service.The innovations that “too big to fail” banks offer involved mainly the complex securities and methods of gambling that enriched the bankers and broke the economy for the rest of us. Meanwhile, because the government has now assured the “too big to fail” banks that they will be bailed out no matter what, the rules of the marketplace no longer apply.  They can engage in risky behavior without fear of consequences.

What’s especially troubling is the government not only got the “too big to fail” banks back on their feet, they’re also favoring them with subsidies that make borrowing cheaper for them than for smaller banks. Economist Dean Baker estimates the cost of the subsidy at about $34 billion so far.

What else might we be doing with that money? For context, Baker compares it with the amount the federal government spends on a program that helps recipients move from welfare to work - $16.6 billion, about half what it costs to subsidize the banks. The subsidy is more than five times what the government spent on a global campaign to prevent AIDS, tuberculosis and malaria.

Obama’s advisers don’t make a persuasive case for the benefits of “too big to fail” institutions.

They simply express the idea that they’re a fact of life. White House economic adviser Lawrence H. Summers says, “I don’t think you can completely turn back the clock.”

It’s not as if critics of “too big to fail banks” are suggesting that we have to return to some mythical past of George Bailey and the neighborhood savings and loan on the corner from “It’s a Wonderful Life.”

We’re still talking about big institutions by anybody’s measure; just not at the scale where they can afford to buy the politicians and control the regulatory agencies that are supposed to be scrutinizing them, or so they won’t take the entire economy and the rest of us down with them when they blow.