For all the proposals stuffed into its 1,336 pages, the financial reform bill that’s headed to the full Senate soon will change very little for the banks that brought us the most dire financial system crisis since the Great Depression, critics say.

When proposed a year ago by Senate Banking Committee Chairman Christopher Dodd, D-Conn., the Restoring American Financial Stability Act of 2010 held enormous promise. The bill was supposed to unify a patchwork of rules and agencies, regulate a “shadow” banking system that hid the riskiest bets, protect taxpayers from picking up the tab for another bank bailout and create a new agency to protect consumers from predatory lending.

On Tuesday, Dodd repeated his commitment to get full Senate approval of tough new measures to address those issues.

“What I’m determined to do is get a strong bill,” he told reporters at a news conference with Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

But Dodd faces an uphill battle. After a year of debate, the bill that emerged from the Banking Committee Monday was riddled with loopholes, compromises and watered-down provisions that undermined the proposals’ principal goals, critics say.

“It doesn’t do any significant reform of the system that got us into this problem,” said William Isaac, chairman of the Federal Deposit Insurance Corp. during the Reagan administration. “All it does is shuffle the same powers around among the same agencies in a little different way. It really hasn’t changed anything.”

To be sure, the package is comprehensive in scope, with 11 separate sections covering segments of the financial services industry. The bill would set up a national insurance regulator, overhaul the powers of the Federal Reserve, set up procedures for shutting down banks that are “too big to fail,” regulate risky derivatives and establish a new agency to protect consumers.

But critics of the bill — and there are many on both sides of the aisle — complain that, as currently written, the sweeping proposal fails to live up to the promise of protecting consumers from predatory lenders, preventing bankers from taking on too much risk and ensuring that taxpayers won’t have to bail them out again if they get in trouble.

One of the most contentious sections of the proposed law, the establishment of an independent agency to protect consumers, is being attacked by Republicans and Democrats. Commercial Loan Workout.

Tags: bankers, banking system, financial reform, financial system, predatory lending

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