Boy, the financial industry is really circling the wagons in the wake of Sandy Weill’s comments endorsing a breakup of big banks and the separation of investment and commercial banking. The finance lobby has revved up their sympathetic sources to ensure the world that change will never come, and anyway that it’s irrelevant.

First, they planted a story with the generally friendly Wall Street Journal, putting to rest any notion that Weill’s comments would spark a debate about breaking up the banks. It starts with this inside information that Bank of America really thought about breaking itself up, good corporate citizen that they are, until they decided against it, which should be good enough for you little people.

At Bank of America, Chief Executive Brian Moynihan and his team looked at a possible bankruptcy of Countrywide Financial Corp., the troubled mortgage operation it purchased in 2008. Management also studied whether it made sense to break off Merrill Lynch, the securities firm it purchased in 2009.

Mr. Moynihan ultimately recommended to his board that neither action made sense. The company decided Merrill had become too big of a profit center and splitting it off could expose the brokerage firm to the sort of funding problems that killed off other Wall Street firms in 2008. Meanwhile, it felt bankruptcy of Countrywide might invite more legal and reputational troubles for Bank of America while exposing other subsidiaries to problems. Bank of America declined to comment.

There also is limited appetite in Washington for tackling the issue just two years after the passage of the Dodd-Frank financial overhaul, which many Republicans have pledged to roll back. Few members of the Obama administration have shown interest in restoring Glass-Steagall, the Depression-era law separating investment and commercial banking that was struck down in 1999 following the deal that created Citigroup Inc.

Now I think there probably is little appetite for major, fundamental changes to the financial system. And I think the Obama Administration certainly wouldn’t want to see that. But look how this is set up. Bank of America is framed as the benevolent actor, seeking the wisest solution and very solemnly determining that they just couldn’t break up their bank right now, because the world would collapse. Losing Merrill Lynch would turn them into Lehman Brothers, apparently, and casting off Countrywide would expose the whole system to risk. So they did the proper thing, and remained one of the largest corporations in the world. And we should thank them. That’s the kind of coverage that shuts down debate over the proper size and configuration of the financial system.

Then there’s the backlash over the mere suggestion of the restoration of Glass-Steagall. Hordes have descended on op-ed pages to enlight the Philistines that Glass-Steagall didn’t cause the financial crisis, and so we should just set that issue aside. Steven Pearlstein offers a representative take:

Repeal of Glass-Steagall has become for the Democratic left what Fannie Mae and Freddie Mac are for the Republican right — a simple and facially plausible conspiracy theory about the crisis that reinforces what they already believed about financial markets and economic policy.

But why let facts get in the way of a good screenplay?

Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch — three institutions at the heart of the crisis — were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favorite villain of the left.

The infamous AIG? An insurance firm. New Century Financial? A real estate investment trust. No Glass-Steagall there.

Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way – largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender.

This completely ignores the interconnectedness that defines the financial system at this point. AIG is an insurance company, sure. But the business that brought them to their knees consisted of selling financial derivatives to counter-parties, almost all of whom were mega-banks that carried an implicit too big to fail guarantee. The banks that got into trouble, in the words of Pearlstein, WaMu and Wachovia, got caught in a housing bubble perpetuated by those same investment banks, through securitization of mortgages and a corruption of lending standards. The Wall Street banks, through derivative trading, magnified the housing bubble and fed the real estate investment trusts. Goldman Sachs and Morgan Stanley CONVERTED into bank holding companies in the midst the crisis to take advantage of the Federald Reserve’s discount window and emergency lending programs. Since they had that implicit guarantee before conversion, the lack of Glass-Steagall protections clearly made a difference there.

Pearlstein is basically parroting this view from Charles Horn and Dwight Smith, claiming that proprietary trading never caused the crisis. What these polemicists always overlook is that prop trading extended the risk within the financial system, and this appetite for risk led to the conditions that created the crisis. The logical flaw lies in trying to create a one-for-one relationship between a particular legislation and a massive, once-in-a-generation crisis. That’s what these people are conveniently doing, as a distraction technique to try and throw people off the trail.

Banking needs to be smaller and more boring. Glass-Steagall protections would help accomplish that. All this folderol about what caused what in the crisis is just a smokescreen.