Whatever the final form of federal financial services reform legislation, one thing is now certain: The biggest of the big banks will still be calling the shots.

That was confirmed Thursday evening, when the Senate by a 61-33 vote rejected a move to eliminate the danger posed to both the federal treasury and the U.S. economy by “too-big-to-fail” banks.

Democratic Senators Sherrod Brown of Ohio and Ted Kaufman of Delaware had proposed an amendment to limit the size of the nation’s largest banks as a means of reining in the financial sector.

They lost. And so too did the prospect that the federal government might establish meaningful control of the banking sector.

What does the defeat mean?  The "financial oligarchy," as economist Simon Johnson described the big banks, will remain in place. And, to further quote Johnson, the federal government will remain "helpless, or unwilling, to act against them."

“The (financial-services reform) bill put forward by Senator Christopher J. Dodd, the chairman of the Banking Committee, has some sensible proposals — and is definitely not an approach that supports “bailouts” — but it does not really confront the problem of the half-dozen megabanks,” argues Johnson. “In the American political system — where the power of major banks is now so manifest   there is no way to significantly reduce the risks posed by these banks unless they are broken up.”

Johnson was a leading advocate for the Brown-Kaufman amendment, which would have broken up banking firms such as Goldman Sachs, Morgan Stanley, Bank of America, JPMorgan Chase and Citigroup that, because of their size, are characterized as “too-big-to-fail.” When a bank is so categorized, it is in a position to demand federal bailouts if it gets in financial trouble, since the failure of just one of these banks could bring down the entire banking system and wreck the real economy – perhaps striking an even bigger blow than the financial meltdown of September, 2008.

Of course, the Senate has backed window-dressing amendments that are designed to foster the fantasy that protections have been establisged to avoid additional bailouts. But the only way to guarantee that there will be no more bailouts is to break up the big banks.

That’s what Brown and Kaufman set out to do.

They sought to set a basic and reasonable standard: that no bank could control more than 10 percent of the total amount of insured deposits. They would have also placed a limit on the liabilities on individual banks so that none could control more than two percent of gross domestic product.

Brown, Kaufman and their allies argued that, only by eliminating that threat, could the promise of financial services reform be fully realized.

They were right.

Unfortunately, the Obama administration, with its close ties to Goldman Sachs and the Wall Street establishment, was not enthusiastic about real reform. While the administration did not explicitly oppose the amendment, Treasury Secretary Timothy Geithner made his opposition clear – as did White House economic aides Larry Summers and Austan Goolsbee.

Dodd also opposed he Brown-Kaufman amendment.

That created an opening for the big banks to use their massive lobbying and political power to defeat the amendment. They did just that, and won.

Twenty-nine Democrats (including Majority Leader Harry Reid, of Nevada, and Assistant Majority Leader Dick Durbin, of Illinois) and Vermont Independent Bernie Sanders voted for the amendment, as did three Republicans: Alabama’s Richard Shelby, Oklahoma’s Tom Coburn and Nevada’s John Ensign.

Twenty-six Democrats (including Dodd and other key players on financial issues such as New York Senator Chuck Schumer) joined Connecticut Independent Joe Lieberman and 34 Republicans in rejecting the amendment.  

What those votes add up to is a serious setback for the sort of reform that might have broken the grip of the “financial oligarchy.”

"This is certainly a defeat for those who are concerned about the dangers of financial concentration in this country," argued Kaufman after the vote.

America’s big banks are getting bigger, and more powerful. In 1998, it took 42 banks to control half the country’s deposits. In 2003, it took 25 banks to control half the country’s deposits. Today, 12 banks control half the country’s deposits.

Even more unsettling is the reality that, according to a HuffPost analysis of Federal Deposit Insurance Corporation data, the four largest financial firms in the United States “collectively account for about 45 percent of all assets in the U.S. banking system.” Further, “four megabanks collectively hold about $7.4 trillion in assets… (a figure) equal to about 52 percent of the nation’s estimated total output last year.”

With the defeat of the Brown-Kaufman amendment, the consolidation will continue and the size and dominance of the big banks will grow greater in the years to come.

And “too-big-to-fail” banks will still pose a threat to the U.S. economy – and use that threat to raid the federal treasury.