A lot of people are surprised by the fact that Wall Street reform seems to be improving as it moves through the Senate. I do generally agree with the premise – the strong derivatives piece, the audit the Fed amendment, the Franken amendment on credit rating agencies, the Merkley-Klobuchar amendment banning liar loans and yield spread premiums, all of these are positive, though that’s not universal (Kay Bailey Hutchison’s amendment yesterday returned a lot of power back to the Federal Reserve to oversee the banking sector, and would increase forum-shopping from community banks).

But if you wanted to answer the question of why this is happening, I think it’s simple – the legislating on this bill is being done out in the open. The Senate Banking Committee basically passed the Dodd draft with almost no work done on it. So that meant that Senators would get a crack at it on the floor. And the biggest victory in this entire process has been the promise on the part of the Democratic leadership not to put in artificial 60-vote thresholds for every amendment. With a majority-vote standard, Senators knew they were getting a fair shake to shape the bill. And under the watchful eye of advocates who can easily paint any vote to the public as a case of putting the interests of banks over the people, Senators were forced to vote in the interests of their constituents. And that has been very beneficial.

What it does not mean, however, is that the bill has reached a stage where it will make a thoroughgoing difference in the way Wall Street operates. Byron Dorgan has really been the Cassandra on this.

The Wall Street reform bill has no doubt drifted leftward in the past several days. But that doesn’t mean all Senate liberals are happy. Several progressive and populist senators think the bill’s broad approach does not call for the fundamental reforms Wall Street needs. They’ve been pushing far-reaching amendments that would shrink major financial companies, and further limit high-risk trading and though their efforts likely do not have enough votes to pass, they at the very least want to get a fair hearing. And they’re banding together to make sure they get one.

“[Democrats] will insist on having the opportunity to have the key amendments offered and debated and voted on,” Sen. Byron Dorgan (D-ND) told me this morning.

Seeing the transparency and sunlight and how it has aided the efforts of reformers, Dorgan and his allies naturally want more. He and Chairman Dodd tussled this morning over an amendment that would ban naked credit default swaps. Maria Cantwell has said that she will not end debate on this bill until she gets a vote on her amendment restoring Glass-Steagall. Others like Russ Feingold want a vote on the Merkley-Levin amendment banning prop trading; there are 22 co-sponsors on that bill, and I don’t agree with the above-linked sentiment that it has no chance of passing. We’ve seen much stranger things happen in this debate.

Dick Durbin’s excellent amendment on interchange fees, explained here, is on the floor now. But I don’t think the leadership or the White House will be able to get away with finishing work on this bill without taking the Senate’s temperature on these key issues. And then we’ll know whether we have a financial reform that actually does something, or one that partisans can just claim as a “victory.”