The Sunday talk shows gave the impression that both sides are moving closer to agreement, but aren’t there yet. I wouldn’t be surprised to see Republicans block consideration of the bill when it gets a vote on Monday night. That doesn’t mean the bill dies, however; Republicans this morning took pains to say they wanted a bill and just wanted to reach an agreement first before bringing it to the floor.

Ranking member of the Senate Banking Committee Richard Shelby (R-AL) said on Meet the Press that he and Chairman Chris Dodd were “conceptually very, very close” on a deal, but he wanted to improve a couple pieces. “If the Democrats want a bill and will give us some things that we think that are substantive in nature, like make the ‘too big to fail,’ send a message that nothing is too big to fail in this country and tighten up the language.”

Well, there’s certainly a way for Shelby to get his wish, and it was described perfectly by Sen. Sherrod Brown on ABC today: include the Safe Banking Act in the legislation.

But put that aside, in terms of too-big-to-fail, we do have this resolution authority. It’s well done, written by Senator Corker and Senator Dodd and some others bipartisanly. I think we need to do more to prevent too big, though. Too-big-to-fail is too big, and my amendment that Senator Kaufman from Delaware and I are offering next week or the week after will basically say that we’ll put some limits on the size of these banks.

Let me give you one statistic, if I could, Jake. Fifteen years ago, the six — the assets of the six largest banks in this country totaled 17 percent of GDP, 17 percent of GDP. The assets of the six largest banks in the United States today total 63 percent of GDP, and that’s too — we’ve got to deal with risk to be sure, but we’ve got to deal with the size of these banks, because if one of these banks is in serious trouble, it will have such a ripple effect on the whole economy. So we simply can’t let them get this big and have this kind of economic power over Main Street, over a small business in Canton, Ohio, or a worker — a manufacturing plant in Dayton. I mean, we just can’t let this happen.

Austan Goolsbee of the President’s Economic Recovery and Advisory Board, also on the show, was asked to respond. This is quite interesting, because earlier in the week Larry Summers appeared to downplay the importance of the size of the mega-banks, saying that “most observers” believe that breaking up the banks would harm American competitiveness. That’s just patently false; every economist who has studied this shows that after a certain point, greater size does not create any societal benefit or economies of scale. Summers also claimed that size caps would put banks “at greater risk of failing” because they would be less diversified and “wouldn’t have profits in one area to turn to when a different area got in trouble.” This also makes no sense; Simon Johnson responds that we’ve already proven this to be fallacious by the fact that all the well-diversified major banks basically failed in September 2008. Johnson said, “As Summers knows very well, the “risk of failing” depends on the amount of capital that banks have.”

So how would Goolsbee react? He sounded more open to it than Summers, but did dodge the question.

GOOLSBEE: Well, the president is totally committed and it’s one of his key principles that we’re going to end too-big-to-fail, we’re going to end the bailout era that began under the last president, for good. That’s not going to happen anymore. We can open — we’re open to negotiating details obviously as we start getting into it. They’re complicated. Some of these financial risks are more like worms where you could chop them in half, but it doesn’t kill them, it just gives you two different worms. Bear Stearns, AIG, they weren’t the biggest, they were just the most dangerous, and we’ve got to come at this from every side.

Look, we’re open to looking at ending too-big-to-fail on the size angle, on the what risky investments they’re allowed to take, looking at the derivatives component so that AIG-like, they can’t threaten to blow up the whole world because of — because they have some of this $600 trillion pool of derivatives that we know virtually nothing about, that are in the dark. All of that ends when we sign this bill. If you look at the bill and take a step back — I don’t know much about the legislative strategies that are going on in the Senate. They are important. I do know that the president has laid out what this bill does, is we’re going to end bailouts, we’re going to hold accountable the people that get into the messes. So if they get in trouble, they fail. All we’re going to do is pay funeral expenses, and we’re going to have the strongest consumer protections ever in this country.

Again, this isn’t a totally forthright response. The focus on AIG in particular is crazy, because they were making their credit default swap bets in connection with the biggest banks. In addition, nobody is saying that breaking up the mega-banks would in and of itself solve the problem, but it would certainly contribute; it’s one of the six major components worth fighting for in the Senate bill. I think Goolsbee is basically agreeing with that, but the White House hasn’t been as forthcoming.

And this is the point. Someone’s not giving the whole story here. Chris Dodd and Dick Durbin basically said that the Safe Banking Act “wasn’t possible” from a political perspective, but there’s no reason not to test that hypothesis. Most of the staff of Senators that I’ve talked to have tried to demur by saying they’re “studying” the issue. That’s probably coming from somewhere. And it appears that Democrats want to hold together the bill they introduce rather than allowing strengthening amendments, which would be a tragic mistake:

On Thursday, there was an uncharacteristically fractious meeting of the Senate Democratic Caucus. On one side, leading progressives such as Maria Cantwell, Ted Kaufman, Dick Durbin, Byron Dorgan, and Jeff Merkley, argued that this was a moment to put forward floor amendments that would both strengthen the bill and force Republicans to take difficult votes either backing reforms or identifying themselves with Wall Street.

But the Banking Committee Chairman, Chris Dodd, was more inclined to try to strike a deal over the weekend with his Republican counterpart, Richard Shelby, for a bipartisan bill. The price of this would be weaker provisions on derivatives, consumer protection, the Volcker rule, and on resolving failed large banks. The political price would be that progressives don’t get to offer floor amendments. Under Dodd’s scheme, which is favored by Obama’s legislative and economic advisers, the Senate would immediately vote to take up the bill and would then vote cloture by a wide bipartisan margin. The bill — still a shell with details to be filled in later — would go directly to the House-Senate conference, where the House-passed bill would become the vehicle for the final measure [...]

In the caucus showdown, Dodd’s response to the progressives was that he was not sure that he could count on fifty Democrats to back tough reform. That’s right — and one of the unreliable Democrats is Dodd himself. But the solution to that problem is for the leadership and the White House to whip the wavering Democrats, as Obama belatedly did on health reform, not to cave in. And while Obama gave a fairly tough speech on Wall Street, he is not yet walking the talk when it comes to personally weighing in with Senate Democrats to hang tough. Having prevailed as a partisan on health reform, Obama is back in touch with his softer, bipartisan side. Not good news.

I don’t see the reason for a legislative process if tough amendments that would actually protect taxpayers from rapacious banks are discouraged. The Brown-Kaufman amendment on size and leverage must get a vote, and if it doesn’t, it’s because, as Chris Hayes said this week, “Washington is totally and completely corrupt.”