"In the midst of a Wall Street fight, when fear supersedes reason, it is difficult for those who are in it, but not directing it, to determine how much is real, how much is sham."

So declared Wisconsin Senator Robert M. La Follette during the great battle of a century ago over regulating the banks that had very nearly crashed the U.S. economy with the panic of 1907.

Little has changed.

As the U.S. Senate again approaches the question of regulating toxic-asset banks and a financial services industry that is defined by speculation and profiteering rather than service to the real economy of the United States, there are plenty of shams.

President Obama and Senate Banking Committee chairman Chris Dodd, D-Connecticut, claim that the reform legislation they are promoting will address the worst excesses of bad bankers and brokers. But the legislation as constructed by Dodd and backed by Obama is so weak that it does not break up "too-big-to-fail-banks," let alone end the boom-and-bust patterns of false growth and real pain that have so undermined the financial stability of working families.

Even worse are Republican critics of reform, led by Senate Minority Leader Mitch McConnell, the Kentucky Republican who was one of the chief backers of the massive Wall Street bailout of 2008. With talking points assembled in closed-door meetings with Wall Street insiders, he has emerged as the loudest defender of a status quo that rewards speculators while denying credit to small businesses and foreclosing on family homes and farms.

The Senate could use a La Follette.

And it may just have one.

Ohio Senator Sherrod Brown, a populist Democrat who has frequently broken with his own party’s leadership on international trade and domestic economic issues, is proposing an essential amendment to the Dodd bill.

Brown and his allies — including Oregon Democrat Jeff Merkley and Delaware Democrat Ted Kaufman — want to force the biggest banks and bank holding companies to downsize so that they no longer will be able to control so much of the nation’s wealth and financial activity that they are "too big to fail."

Big banks would not disappear under Brown’s plan. But they could not control more than ten percent of all total deposits, as three now do, and accumulate liabilities so substantial that — in the event of a bust — they could threaten the entire U.S. economy. It is just such a threat that led to the 2008 bailouts and the continued coddling of bad banks by federal regulators.

"The major issue is to keep the banks from getting too large to begin with," explains Brown. "Too big to fail is too big. That’s where we need to be much more aggressive."

Without Brown’s amendment, Dodd’s bill amounts to little more than tinkering around the edges of the real problem. In other words, it is the sort of sham that La Follette bemoaned a century ago, when he warned that — despite talk of trust busting and reform by the likes of Teddy Roosevelt and Woodrow Wilson — "the greatest banks of the financial center (Wall Street) have become primarily agencies of promotion and speculation."

Real reform requires real controls on the biggest banks.

"This is about holding Wall Street accountable to ensure that American taxpayers never have to bail out the big banks again," says Sherrod Brown. "While taxpayers helped Wall Street banks get back on their feet, Main Street Americans were not so lucky. Their homes, their jobs, and their retirement accounts were lost or put at risk due to big banks that gambled with their money."

Brown’s right.

The Senate should reject sham reform and go for the real thing.