The financial reform that is about to be passed is a farce. Like so much in Washington, it is strictly for the tourists. The following article from Sox First provides commentary on the legislation:

You think the Obama administration's legislation to fix US financial regulation is going to change Wall Street? You're dreaming! Nothing has changed, investment banks are a protected species in the US.

Hailed by some sections of the media as something that will put banks on a bigger leash, the reality it does nothing of the sort.

It's just a massive con because of the way the legislation treats derivatives, the instruments that Warren Buffett described as the weapons of financial mass destruction that destroyed institutions like Lehman Brothers. After much lobbying by Wall Street, financial firms will still be allowed to hold onto those businesses that buy and sell derivatives products like foreign exchange and interest rate swaps. It's only the riskier products, including the kind of credit default swaps that helped sink insurance giant AIG as well as certain commodity derivatives, and those traded by agriculture companies and airlines to mitigate risk, that will have to be spun off into other businesses.

The problem is that the first sort of derivatives contracts for say interest rates comprise the lion's share of business for the banks. In other words, this piece of legislation is not going to change their business model. Banks will still be putting the financial system at risk by trading in derivatives.

Joshua M Brown at the Reformed Broker describes the legislation as the Let's Not Allow Our Largest Donors To Embarrass Us Again Act of 2010. "There will be some limitation to what large banks can do on a proprietary basis, but they will still be de facto giant hedge funds, albeit hedge funds with higher capital reserve requirements," Brown writes.

Tyler Durden at zero hedge is even more blunt: "Congrats, middle class, once again you get raped by Wall Street, which is off to the race to yet again rapidly blow itself up courtesy of 30x leverage, unlimited discount window usage, trillions in excess reserves, quadrillions in unregulated derivatives, a TBTF framework that has been untouched and will need a rescue in under a year, non-existent accounting rules, a culture of unmitigated greed, and all of Congress and Senate on its payroll. And, sorry, you can't even vote some of the idiots that passed this garbage out: after all there is a retiring lame duck in charge of it all."

This legislation is just window dressing. The US administration has protected the banks who are bankrolling politicians. It does nothing to stop the next financial crisis.