Hey, someone listened to wizened old giant Paul Volcker, for the first time in years! Since the beginning of time, or 2009 (whichever came last), Volcker has been pushing to maybe start regulating the banking industry again in a manner of which Sens. Glass and Steagall might approve.  It’s just that no one really listened to him, because he is old or something.  But his old age and treachery have finally overcome Larry Summers’ youth and exuberance, as yesterday the president told Wall Street to bite it.

On Thursday, Mr. Obama proposed a plan that would prevent banks that receive a federal backstop from investing their own money in financial markets—what is known as proprietary trading. He also pushed for new limits on the size and concentration of financial institutions. Both moves echo the Glass-Steagall Act, the Depression-era banking curbs that was repealed in 1999.

The proposal marked the return of Mr. Volcker to center stage in the Obama White House. The 82-year-old chairman of the president’s Economic Recovery Advisory Board consulted closely with Democrats in the House and Senate as they drafted their proposals to address “too big to fail” entities, referring to financial behemoths whose collapse might bring down the economy. Mr. Volcker spoke frequently with Mr. Obama as well.

By now you’ve heard more details about the plan – which has to be written into actual law by Congress, which will take nine years and by the end of it will not contain the words “prevent” “banks” or “trading” – and how it will potentially affect every big-name bank out there.  Goldman and Morgan Stanley both face having to shed their in-house PE divisions or stop being bank holding companies, distinctions both firms took on to get at that TARP money.  Bank of America is laughing extra-hard right now, what with the Merrill Lynch acquisition that cost it a CEO, billions of dollars, and an ongoing SEC investigation, being rendered largely useless if it can no longer invest in itself.

Summers and Timmay had, until now, been prevailing with their opinions that increased transparency would be enough to keep the banks in line.  This is accurate because Lloyd Blankfein is extremely concerned with public opinion, as he has demonstrated…at no time.  What changed?

In short, someone noticed that the only people who liked the Summers-Geithner strategy were…banks.  Everyone else was seriously unamused and thought banks were being coddled, populist outrage, yada yada yada, unhappy electorate.  On the other hand, bills rolling through the House and Senate to restrict the largest banks were proving mighty popular.  Looking at Summers, who played a vital role in killing Glass-Steagall eleven years ago, one suspects it became quite difficult to listen to anything he said.  Looking at Timmay, one must find it difficult not to laugh.

For the time being, Volcker is once again king of the financial world, which is handy because he can see the entire thing from way up there.