Despite the prospective "success" of financial reform legislation, my sense is that very little will change on Wall Street as the bills passed by the House and Senate are likely to emerge from conference committee. And that will prevent any economic recovery that isn't just another asset bubble in disguise.

The fundamental problem, or at least one such obstacle, as I see it, is that reform as currently likely will do little or nothing to restructure the banking industry, instead leaving it to regulators to impose new rules with which to limit risk.

The market's reaction yesterday to German Prime Minister Angela Merkel's decision to bow to public opinion and curb what she called "destructive" trading brings the issue of financial transaction taxes and the like front and center.

But the fact that investors hate the idea of taxes and similar limits on transactions may belie the main argument against such measures, which is that the cost will simply be passed along to the public. If that were true, then traders' profits shouldn't suffer, and neither will markets' ability to help finance the real economy.

Gretchen Morgenson's piece in Sunday's Times points out how Fannie Mae and Freddie Mac are serving as a source of back-door bailouts for the banks.

And she quotes Dean Baker, co-director of the Center for Economic Policy Research in Washingto,n DC, to the effect that their continuing status as half governmental agency, half private enterprise creates an irreconcilable conflict between taxpayers and shareholders.

The violent backlash against the rescue plan that Europe has come up with for Greece should be a warning sign for those who think the bond market should rule public policy.

Yes, Greece must get its act together in terms of the black market and corruption, and tighten its belt on public finances. It simply has no other choice. But austerity isn't going to help the country repay its debt, not when the global economy continues to suffer from weak demand.

I have to say that today's House Financial Services Committee hearing into Lehman Brothers' collapse leaves me confused in more than one respect.

Ben Bernanke told the committee that regulatory authority over Lehman rested with the Securities and Exchange Commission under a voluntary program set up in 2004.

Back when the Federal Reserve started buying mortgage-backed securities from investment banks in the fall of 2008, there was some feverish speculation within the ranks of Financial Week, where I worked at the time, that the Fed's efforts were helping the banks make their balance sheets look better than they really were. But there was no way to prove that at the time.

Now the Lehman Brothers' examiners report is reviving such speculation, because Lehman's transactions with the New York Fed were similar to those it engaged in with other banks. And in the case of so-called Repo105 transactions involving $50 billion in Lehman assets that were temporarily shifted off of Lehman's balance sheet, the report says those transactions were "materially misleading" to investors because they were not properly disclosed.

Bank of America claims it's comfortable with the amount of losses on second mortgages it would have to absorb if it complied with Barney Frank's request that it write them off so as reduce principal on first mortgages and thus help stem foreclosures.

But an analysis by financial blogger Mike Konzcal suggests such a view may be based rosy assumptions about the value of the second liens, and that the bank may have to raise more capital as a result. So might Citigroup and Wells Fargo, Konzcal finds.

A piece today by derivatives expert Satyajit Das helps put to rest some if not all of the doubts expressed about the Volcker Rule's potential efficacy.

Much of the criticism by those who say it doesn't go far enough focuses argues  that forcing banks that get deposit insurance to shed their proprietary trading operations would not necessarily eliminate systemic risk, since taxpayers could not afford to see huge trading operations bring down the markets even if their deposits were still protected. Mister Market is just too important for that.

Can someone please explain what Timothy Geithner really thinks about Wall Street? Today we get completely mixed messages from the Treasury about financial reform.

One the one hand, The New York Post and Bloomberg reported that the Treasury has succeeded in getting the White House to drop the so-called Volcker Rule, the proposal that is named after the administration's chief proponent, Obama advisor and former Fed chairman Paul Volcker, and would force banks that get deposit insurance to shed their proprietary trading operations and other speculative businesses.

Matt Quinn and I are struck by the contradiction at the heart of Tim Geithner's stated role in the bailout of AIG when he was president of the New York Fed.

On the one hand, Geithner claims he had very little to do with it, and so isn't responsible for the fact that the bank failed to use its leverage to negotiate better terms for taxpayers instead of paying Goldman Sachs and other AIG counterparties 100 cents on the dollar.