John McCain is getting all mavericky again.

He’s now on board for the reinstatement of Glass-Steagall and the breakup of the financial supermarket megabanks. Barack Obama, meanwhile, thinks that’s too much actual change, while Phil Gramm is off getting the vapors somewhere.

David Reilly of Bloomberg says Glass-Steagall II is not as far-fetched as it has seemed, what with the heat on Congress ten or so months from the election, and he takes a solid look at what such a move would entail. One thing: It would recreate old Wall Street, which doesn’t exist anymore, the way it was a bit more than a decade ago.

JPMorgan Chase & Co. would have to spin off Bear Stearns. Bank of America Corp. would have to shed Merrill Lynch. Citigroup Inc. would have to hive off its own investment-banking activities.

The point, something McCain gets, is to prevent commercial banks from having casinos built on top of them placing bets with depositors money—all backed by a free government insurance policy. Actually the casino metaphor doesn’t really work since the house almost never loses. Goldman Sachs, an Audit funder, is the closest you get to the house. But McCain also says he wants “a larger number of smaller, more aggressive companies that are not so big that their failure would bring the entire economy down.”

To really get there, Reilly says, you’d have to get even tougher than Glass-Steagall. He calls for busting up Goldman Sachs, for instance, into several pieces (emphasis mine):

As things now stand, Wall Street and big banks are bundles of conflicts that too often pit firms against their customers. That led to some of the riskier practices that helped fuel the financial crisis.

Investment houses underwrote and sold investors complex bundles of mortgages, for example, even as they bet the housing market would crater.

This needs to change. Either a firm is an adviser, a broker, an asset manager or a hedge fund. It can’t be all things to all customers. Nor can a firm be all those things and not create the kind of linkages that threaten the stability of the financial system.

So firms should have to choose between being, say, brokers and investment bankers versus proprietary trading shops or asset managers.

Now that’s thinking outside the bubble. Wall Street and those on its periphery (Geithner, Summers, et al) can’t even imagine such a thing.

This doesn’t touch the problem of too-big-to-fail pure banks simply being way too big for anybody’s good—consumers, managers, local economies, Uncle Sam, etc. Here’s Simon Johnson of Baseline Scenario:

More generally, in the mid-1990s today’s big six “Large Integrated Financial Groups” added together had assets worth less than 20 percent of GDP – with no bank being larger than 4 percent of GDP (including off-balance sheet liabilities). Today, these six are over 60 percent of GDP combined and still growing.

But what Reilly’s talking about would certainly be a start.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.