Why would we want banking innovation?

When I first heard about the recovery of major banks' profits I was encouraged, we made a big public investment to prevent a complete crash and they had apparently used that to recover and return to some sense of normalcy.  In that sense the bailing out of financial institutions seemed to work, and should be applauded.  The trouble is that the way in which they've recovered is disturbing, effectively returning to the same way they did business before that caused the economic crisis.

Goldman Sachs, JPMorgan Chase and others - which have received tens of billions of dollars in federal aid - are once more betting big on bonds, commodities and exotic financial products, trading that nearly stopped during the financial crisis.

That Wall Street is making money again in essentially the same ways that thrust the banking system into chaos last fall is reason for concern on several levels, financial analysts and government officials say.

There have been no significant changes to the federal rules governing their behavior. Proposals that have been made to better monitor the financial system and to police the products banks sell to consumers have been held up by lobbyists, legislators and turf-protecting regulators

This has been my concern since the crisis began.  One thing I thought Obama would do that would be an important change would be to re-regulate banking institutions to prevent the kind of gambling that they engaged in that got us where they are.  Obama does have a proposal for re-regulation of banks, so the problem isn't being completely ignored. The thing is that I don't feel like Obama's heart is really in this one, and while I'm in no position to comment on what will be an effective banking regulation, I highly suspect that anything Obama proposes and anything Congress can get behind, doesn't really address the problem.  What I find bizarre here is the talking point in response to arguments for more regulation, that we don't want to "prevent innovation by over regulating."  This is a variation off a traditional free-market talking point that in some contexts has some validity, the thing is that it really doesn't here.  What I've never heard anyone mention in response to someone who says this however is why we would even want our banks innovating.  Personally I want my bank, in an ideal perfect world (that doesn't exist) to protect my money and use it to lend out to people who will be able to pay it back.  I do not want my bank to be innovative, I want it to do the normal stuff and not engage in complex investment schemes like credit default swaps.  Now Apple Computers on the other hand I do want to innovate, I want them to try to make the next step and advance technology, that's good for the world, complex methods of shuffling money around and trading as though they have value things that really don't have any on the other hand, is not productive or helpful to the world in any way.  Why have I never heard anybody bring this up, is innovation in the case of a bank, actually a good thing that we should be protective of when considering new regulations?

The lack of any changes in the regulation of financial institutions yet has allowed them to return huge profits again, but by doing the same things they were doing before, by being innovative, and in the profits screwing up real people's lives.  Sorry, but lets please not show deference to the innovation argument as we consider new regulations on the banking industry, and please lets get on this before they crash our economy by innovating again.