The increasing scrutiny of the swaps that Goldman Sachs arranged to help Greece hide its debt shows once again why investment banking should not be subsidized by taxpayers.

Yes, the separation of commercial and investment banking imposed by Glass-Steagall with that in mind may seem antiquated, and it may not have prevented the financial crisis. Surely it would have had no bearing on what happened in Greece. And neither would the Volcker Rule, which doesn't even go far enough in terms of the U.S.

Contrary to press reports , the choice that the Volcker Rule presents to Goldman Sachs may not be very stark.

It's one thing to give up a license as a depositary institution, which provides FDIC insurance that Goldman cares little about. It's quite another to relinquish its status as a financial holding company, which allows Goldman to benefit from taxpayer assistance through the Fed instead of the FDIC if it runs into trouble.

This paper published last Sunday at voxeu.org makes a worthwhile suggestion that would improve President Obama's proposed tax on banks too big to fail.

Rather than indiscriminately tax all uninsured liabilities of banks of a certain size, as Obama's proposed levy would do, the tax proposed by Enrico Perotti, a professor of international finance at the Amsterdan Business School, would fall on short-term ones, thereby reducing banks' leverage and improving their liquidity.

Think Paul Volcker's being too tough on banks? Volcker is a pussycat compared to U.K. regulators.

In its latest move, the Financial Services Authority is threatening to revoke the licenses of banks that fail to comply with its demands regarding bonuses.

Chris Dodd's scolding of the Obama administration on Tuesday for wanting to do "too much" to restore banking regulation sent me into a short trance and a vision of the future: Dodd as banking lobbyist.

Here's the Dodd quote if you don't believe it: "I don't want to be in a position where we end up doing nothing because we tried to do too much."

Goldman Sachs has no doubt borne the brunt of the public backlash against too big to fail banks. Rightly or wrongly.

The outrage over compensation always comes back to Goldman. And now the Volcker Rule seems disproportionately aimed at the venerable bank and its lucrative proprietary trading operations.

With that in mind, the bank is understandably mulling ways to defend itself.

One idea floated in a Reuters article is for Goldman to take itself private. (A similar rumor circulated right after Lehman Brothers collapsed and many thought Goldman would be a target of short sellers.) 

I'm finding it particularly difficult right now to sort through the controversies raging over the Bernanke nomination, the latest revelations regarding Tim Geithner's dealings with AIG, and the pros and cons of the so-called Volcker Rule for banks too big to fail.

The "change" president, finally, might actually change something.

"It's a fight I'm ready to have," Barack Obama says on TV in taking a stand against the decade-old racket that lets commercial banks take customer money and go a-gaming with it. This of course is the politically astute thing to say in these troubled times. But the White House stagecraft this week adds gravitas to the rhetoric by bringing Paul Volcker in from the cold and standing him up in Obama's corner. Volcker's the guy who's been going around shouting into the wilderness that Glass-Steagall must be revived. Suddenly, the idea has wind in its sails.