Good news! I'm delighted to report that Citigroup, one of the biggest banks in the world, has cut down on proprietary trading. That is, it is doing fewer stock, bond, derivative, etc., etc., transactions for its own account. The reason this is good news is that the Citigroups of the world did such an abysmal job of trading-gambling with their depositors' FDIC-insured money that they formed a conga line marching into insolvency, dragging us into the Great Recession we are all enjoying.

The inanity of the big banks' proprietary trading is pretty much indisputable, which is why Citi's CEO Vikram Pandit made that comment at a congressional hearing. That's also why he said he didn't believe "banks should be using bank capital to speculate." What else could any fair-minded person say after their record of trading mortgage-backed securities so intelligently that the entire financial industry required an unpopular government bailout? It's like saying "banks shouldn't build their vaults out of cardboard."

Curbing proprietary trading is good, solid, conservative, Edmond Safra-style banking, and it's great to see Pandit endorsing that principle. It's so obvious that President Obama is pushing for a law—one of the more self-evident pieces of legislation in recent history—that would greatly not rely on the goodwill of bankers, but would require significant reductions in proprietary trading by federally insured banks. The Obama administration would also prevent banks from investing in, or sponsoring, hedge funds and private equity funds. The draft legislative language, which the Treasury Department sent to the Senate last week, also would prevent any bank holding company from expanding to the point that it comprises in excess of "10 percent of the aggregate consolidated liabilities of all financial companies at the end of the prior calendar year." That's the "better not get too big to fail" provision, and it's a mighty smart idea.

This sound and intelligent proposal is called the Volcker Rule—misnamed, actually, as it's not just a single rule—after the ex-Federal Reserve chairman who proposed it in January. Pandit didn't exactly endorse the Volcker Rule, and it's unlikely he ever will, but yet he endorsed its underlying logic: Banks must cut down on their proprietary trading. If they won't do so voluntarily, the Volcker Rule implicitly says, we'll force them to do so.

So that's it, right? Time to cut and paste into the statute books?

Not exactly. Not only is the Volcker Rule far from a slam dunk, but it seems to be more dead than alive. It's remarkable, considering all we've gone through, the expressions of horror that have greeted these beneficial, obvious, and almost childishly simple proposals. The banking industry is virulently opposed, but that's what you'd expect. If the banking industry actually endorsed banking legislation, you'd have to wonder what was wrong with it. But it's not just the bankers.