I’ve seen some commentary about the gradual improvements to the Wall Street reform bill in the Senate. And too be sure, a few amendments have gotten by that would be beneficial, some of them quite beneficial.

Would any of them they change the way Wall Street does business? No, I don’t think so, though those amendments are out there. But don’t think for a second that the bank lobbyists have lost all clout on Capitol Hill. For example, an amendment that would preserve the Federal Reserve’s regulatory power over thousands of community banks passed with 90 votes this morning. You can argue that this doesn’t help the biggest banks much, but it does further centralize power at the Fed, which is after all controlled by those banks, in large part.

Now the finance lobby has set their sights on beating bank the few remaining reforms that would truly constrain their risk and their profit-making and make the sector less dangerous for the overall economy. Here’s Simon Johnson:

The good news is that change happens. The bad news is that because leading governments are unwilling even to seriously discuss difficult economic scenarios (“too radical”, “don’t rock the boat”, “powerful interests are opposed”), when they bring in new policies there is a great deal of improvisation and major mistakes are entirely possible [...] But after you save the banks, they again become so politically powerful that they fight hard to block serious reform. They already turned back the effort to really limit their scale – the Brown-Kaufman amendment, defeated last week. And now they are striving to prevent effective restrictions on their scope – the Merkley-Levin amendment (supported in principle by Paul Volcker, the White House, and the president, coming up this week): press release; amendment text; WSJ story.

If you don’t fix the system now, you’ll have another major crisis – and then you likely won’t fix the system again.

There is no question that lobbyists are gunning for Merkley-Levin, which would end reckless trading out of the proprietary accounts of banks which receive deposit insurance and cheap money from the discount window. The vote, expected tomorrow, will be extremely close. And that amendment is not alone: the Dorgan amendment which would force an advisory board to break up any firm that presents a systemic risk; the Dorgan amendment banning naked credit default swaps; the Cantwell-McCain amendment restoring the Glass-Steagall firewall between investment and commercial banks; the Franken amendment reforming the credit rating agencies. All of these improvements to the bill are legitimate and not cosmetic, and represent the difference between a bill politicians can wave around and a bill that regulators can actually use.

Byron Dorgan, the retiring Senator from North Dakota, just gave a speech that laid out the stakes extremely well for this bill. “I don’t recongize the value of financial institutions that have run this country into the ground … Are we going to pass legislation that has real strength, real regulation and real rules that work? That says Too Big To Fail is too big? That pierces the bubble of risk? That addresses the question of securitization of everything? That addresses the question of rating agencies? Are we just going to pass a bill that says ‘good for us,’ only to find ourselves 5 years later, 10 years later, that we’re in the same swamp? This has to be fixed with real policies that tackle the central issues that caused this collapse.”

There is a general feeling in Washington that they have to deal with Wall Street. It can be leveraged to force real changes. We’ll see whose side members of the Senate decide to be on in the coming days.