Looking at the way that U.S. Senators Elizabeth Warren and John McCain are pitching their proposal for a 21st-century version of the Glass-Steagall Act, I can’t help but wonder if they’re making a mistake.

Mostly they have promoted their new bill in terms of protecting taxpayers and the broader economy from a too-big-to-fail bank that might need another bailout. A lot of voters don’t get the connection between the problem and the solution being proposed, and it’s debatable if there is one. Here’s a better argument: The reason it’s a good idea to separate securities firms from commercial banks is to protect consumers from brokers selling schlock investments.

If the senators are going to persuade Congress to bring back Glass-Steagall, they should show examples of real, sympathetic people. This brings me to the story of Philip L. Ramatlhware, an immigrant from Botswana who went to a Citigroup Inc. branch in downtown Philadelphia one day five years ago to open a regular bank account.

He was 48 years old at the time and disabled, after being hurt in an accident as a passenger on a Greyhound bus. His English wasn’t good, he had no college education and his last job had been at a fast-food kiosk at the Philadelphia airport. In April 2008, he received $225,000 in a settlement for his injuries, part of which went to pay legal fees. He was holding the settlement check when he walked into the branch.

Arbitration Claim

Immediately he was referred to a broker for a “financial consultation,” according to an arbitration claim he filed against Citigroup. The broker assured him the money would be invested in “guaranteed” funds and that he could have access to them whenever the need arose, the complaint said. Ramatlhware gave him $150,000 to invest. The broker put $5,000 into a bank certificate of deposit, bought a $133,000 variable annuity and invested the rest in a series of mutual funds.

Less than six months later, Ramatlhware had lost $40,000, according to the complaint. Citigroup settled the case in 2010 for $22,500, without admitting liability, according to a report on the case by the Financial Industry Regulatory Authority.

There are countless tales like this of banks cross-selling unsuitable investments to unsophisticated customers. For whatever reason, lots of people trust the advice they get from someone working in the lobby of their local retail bank branch, even if they normally would never set foot in a brokerage firm.

Here’s another example from Finra’s files, involving a Michigan couple, Alberto Ferrero and Qingwen Li, who filed a claim in 2010 against CCO Investment Services, a unit of Royal Bank of Scotland Group Plc. They sought $60,000, plus attorneys’ fees and other damages. They were awarded almost $72,000.

Their story began one day in April 2007 when they walked into their local bank, Charter One, also owned by RBS. Here’s how the arbitrator explained the November 2012 ruling in their favor:

“Claimants are recent immigrants to the United States, and they had very limited investment experience,” wrote James Graven, an attorney from Toledo, Ohio, who was the arbitration panel’s chairman. “Claimants went to their bank to roll over their CD. The bank directed them to a registered representative. Claimants’ primary objective was capital preservation.

“The broker recommended a solicited trade placing one third of claimants’ net worth in one speculative fund. The broker made material misrepresentations and omissions concerning risk. Claimants lost approximately 50% of their investment in 18 months. The broker invested claimants’ whole account into one high risk junk municipal bond fund.”

The banking industry has a long history of preying on unsuspecting depositors by selling them garbage securities without regard to suitability. This was a big reason Glass-Steagall was originally enacted during the Great Depression. It has been a recurring problem ever since key portions of the act were repealed during President Bill Clinton’s administration.

Auction Rates

There were $61 billion in settlements between large banks and the Securities and Exchange Commission over sales of auction-rate securities, the market for which crashed in 2008. At Wachovia Corp., for example, the SEC said bank employees helped recruit retail depositors for the investments. (Wachovia was bought by Wells Fargo & Co. in 2008.)

Most recently, according to a July 8 article by American Banker, the Office of the Comptroller of the Currency warned JPMorgan Chase & Co. early last year that the bank had wrongfully steered clients into in-house investment products. As a result of its findings, the OCC required the company to refund fees to an unknown number of customers. Unfortunately, we don’t know many more details because the examination findings are confidential (which should make this ripe for a congressional inquiry). American Banker said its source was a person with direct knowledge of the findings.

Now back to Senators Warren, a Democrat from Massachusetts, and McCain, the Arizona Republican. What they should do is canvass the country for the most gut-wrenching stories they can find about ordinary depositors who have been ripped off by their banks’ broker-dealer arms. Then invite them to testify before Congress and tell the country what happened, in their own words. The Senate Permanent Subcommittee on Investigations, where McCain is the ranking Republican, would be an ideal forum.

The best way to keep the sharks from preying on the customers in the bank lobby is to not let them in there in the first place. If this also helps make systemically dangerous banks smaller, that’s all for the better.

(Jonathan Weil is a Bloomberg View columnist.)

To contact the writer of this column: Jonathan Weil in New York at jweil6@bloomberg.net.

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net.