If you think health care reform has been an unsatisfying test of the government’s ability to deal with our pressing problems, brace yourself for bigger disappointment in its attempt to bridle Wall Street. This is when the true heavies go to work, and, as opposed to the medical industry lobby, the moneychangers fear not the wrath of their clients or, as Scripture tells, any higher power.

Certainly not that of the Congress or the president whose powers they have so confidently purchased. That is how we got into this mess. The bankers wrote the rules of the road that allowed them to exceed all reasonable limits when Democrat Bill Clinton was in the White House. And when the crash came, it was the Republican George W. Bush who made their problems go away. Having survived that disaster of their own creation, they are not about to let anyone make them change their ways.

It will definitely take more than the likes of Connecticut’s lame-duck Sen. Christopher Dodd, a likely candidate for more lucrative employment in the financial sector that he has served so faithfully. On Monday he made a big show of introducing legislation to rein in Wall Street, having failed to elicit a single Republican vote after months of caving in. He has abandoned his earlier proposal for a truly independent regulatory agency that would challenge the Fed, which got us into this jam. His bill rejects a public audit of the Fed, where he would house what remains of the president’s proposed consumer protection agency.

There is only a nod in the direction of a return to the Glass-Steagall Act’s separation of investment and banking firms, a regulation that Dodd, along with New York Democrat Charles Schumer, helped kill a decade ago. As The New York Times reported on Oct. 23, 1999: “Dodd, whose state is home to the nation’s largest insurance companies, and Schumer, with strong ties to Wall Street, have long sought legislation to repeal the Glass-Steagall Act.”

That’s what legally made possible the too-big-to-fail mergers of insurance giants like Travelers and AIG with banking companies. As Peter Eavis pointed out in Monday’s Wall Street Journal, Dodd’s current bill “still flunks the AIG test,” in that “if the Senate bill became law, it looks like the government could still find itself making the sort of payments it made to AIG counterparties.” And that’s before the lobbyists go to work.

The most glaring failure of his proposal is to fully come to grips with the enduring threat of unregulated derivatives. In this area the bill’s text is an unparalleled exemplar of the use of the run-on sentence in the pursuit of obfuscation. But what is clear is that the out-of-control derivatives market, which Dodd helped engineer 10 years ago when he supported the Commodity Futures Modernization Act, will be at best tempered somewhat. Obviously aware that his current bill provides no serious answer to this most pressing of our financial industry problems, Dodd holds up the wan hope that “Senator Jack Reed (D-RI) and Judd Gregg (R-NH) are working on a substitute amendment to this title that may be offered in full committee.” Yes, we know what such bipartisan efforts bring, and it does not bode well for getting a grip on a derivatives market that threatens to do us all in.

Warren Buffett wasn’t kidding when he called them “financial weapons of mass destruction,” and by now most Americans are aware that the innocuous-sounding derivatives that he was referring to have done great damage to our way of life. It extends from foreclosed homes in Florida that are collected in collateralized debt obligations to credit default swaps on Greek airport revenue, and, as The New York Times reported Monday, massive corporate collateralized loan obligations that are “a potential financial doomsday.”

The dubious security bundles are as vast as they are obscure and their notational value is staggering. As Dodd’s committee’s fact sheet stated, “The over-the-counter derivatives market has exploded — from $91 trillion in 1998 to $592 trillion in 2008.” The current figure is $605 trillion and still growing.

As Dodd’s press release put it, “Because the derivatives market was considered too big and too interconnected to fail, taxpayers had to foot the bill for Wall Street’s bad bets.”

Now he tells us. But let’s hope there’s more to this bill than meets my eye and that the lobbyists don’t get to gut it further. It’s still a work in progress with some good points, the House bill is better, and it is time that Congress hears much more from the suffering public.

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