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The Senate reform bill is much kinder to the finance industry than it deserves.:

What may be most striking to average Americans about the bill is actually how un-punitive it is. Given what the financial sector put the nation through in the past three years, the case for strong punishment was very compelling. But while there are provisions that the financial sector doesn't like, the legislation that is now headed to a House-Senate conference is in fact relatively tame.

Consider what's not in the bill. Earlier this year, President Obama came out in favor of the Volcker rule, which would have prohibited regulated banks from engaging in the enormously profitable (but risky) business of proprietary trading. That would have punished the large investment banks. But the Volcker rule is not part of this legislation.

There's been discussion of a Tobin tax, the idea of levying a tax on financial transactions such as currency, stock, and derivative trades. That would raise revenue and provide disincentives for the socially useless algorithmic trading that creates risk for all investors. That would have punished many financial institutions. But the Tobin tax is not part of the legislation.

The House version of financial reform called for a $150 billion fund to be raised, largely by taxing big financial institutions, that would help wind down failed institutions. That would have exacted a significant (and, to my mind, justified) cost on big investment banks. But that fund is not part of the Senate legislation.