While many critics claim the financial regulation bill that emerged from Congressional negotiations on Friday will do next to nothing to reduce the chances of another banking crisis, there are some limits on risk taking that could do just that.

The one that strikes me as the toughest and most critical is the so-called Lincoln amendment, which would require banks to separately capitalize their trading in credit default swaps, which were central to the recent crisis.

This Bloomberg story echoes a common complaint about efforts to increase the public accountability of the Federal Reserve, which is that they will weaken its independence.

I've ranted before about the Fed's "independence" being in the eye of the beholder. (A central bank beholden to private banks is hardly independent.) But proponents have one valid concern: Subjecting the Fed to the will of the mob could be inflationary (though why inflation is a bad thing when demand is depressed is beyond me).

I'm as a big a fan of Paul Volcker as the next guy but am struggling to understand why he objects to the so-called Lincoln amendment. All it would do at the end of the day is force banks to separately capitalize their derivatives operations, as Simon Johnson explains today.

I can understand why the bank lobby is against the idea. More capital would make their operations less profitable. But that's also the only way to make them less risky as well.

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.

I see that Ben Bernanke, Sheila Bair and even Paul Volcker are trying to convince Congress not to require big banks to spin off their derivatives operations, or make other fundamental changes besides getting out of proprietary trading, the so-called Volcker rule.

Bernanke, in particular, is defending the rest of the current set-up and insisting, in effect, that regulators can take care of all of the rest of the problems that banks that are too big to fail represent, with just a few technical changes involving leverage and capital reserves and the like.

Better late than never, I suppose. But Big Bob Rubin has apparently had a change of heart as to the virtues of financial deregulation.

Appearing before the Financial Crisis Inquiry Commission today with former Citigroup CEO Charles Prince in his capacity as former vice chairman of the bailed out bank, Rubin expressed much different sentiments about the need to prevent banks from becoming too big to fail and derivatives from adding untold amounts of undetectable leverage to the financial system than he did when he was President Clinton's deregulator in chief.

With Congress expected to debate financial regulatory reform until the cows come home, lots of commentators are weighing in on what it must do to inhibit, if not prevent, an even worse financial meltdown. (And no, we aren't out of the woods, not by a long shot.)

Our own Marine Cole ventured into these waters last week with a piece on to what degree legislation as currently formulated would require bank regulators to toughen their capital reserve requirements. But there's a lot more to say about that, too much.

I see that the slow boat to financial reform continues to drift sideways, as Senate Banking Committee member Bob Corker followed Paul Volcker's call for action yesterday with a sorry-no-can-do.

Unlike health-care reform, Democrats will need the support of a Republican like Corker to get a bill containing resolution authority for big banks, derivatives regulation, and consumer protection enacted this year. Only one piece of legislation can be passed through the budget reconciliation process in any one year, and now that the process was used for health-care reform, everything else will require a filibuster-proof majority that the Democrats no longer have.

Maurice "Hank" Greenberg has never been a popular guy. He long had a reputation for being a bully, tough to work for. He would threaten lawsuits when he senses a publication was working on a story critical of him or his company. And in his 32 years running American International Group (AIG), he was routinely criticized for not have a viable successor in place in case he abruptly could no longer run the insurance giant.

In 2005, however, the 84 year-old resigned on the urging of then-New York attorney general Eliot Spitzer, who was investigating the questionable practices of a number of insurance companies, including AIG.

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.