) -- Has the financial system been reformed yet?

Reading the news, you'd think something momentous had happened.

The New York Times

calls it "the biggest overhaul of financial regulations since the Great Depression."


goes out on a limb and calls it "the most sweeping overhaul of U.S. financial regulation since the Great Depression."

The Wall Street Journal

showed more restraint, but still stated that the legislation coming out of Congress will "transform financial regulation."


couldn't find a way to avoid using the word "overhaul" in its lede, but, to its credit, got in a subtle dig in the second paragraph, saying it "may crimp the industry's profits."

May crimp? That's the best we can do in our sweeping overhaul -- possibly knock a few pennies off the profits of a


(C) - Get Report

or a

Bank of America

(BAC) - Get Report


The stock market didn't seem to be too worried Friday morning, as shares of those and other financial giants like


(MET) - Get Report


American Express

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(AXP) - Get Report


Wells Fargo

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General Electric

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were all in positive territory a few minutes after the market opened. So was the

Financial Select Sector SPDR

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, a widely-tracked exchange traded fund that serves as a proxy for the financial industry.

True, shares of financial companies have sold off in recent weeks, and Friday's gains aren't on a pace to undo that damage. But I wouldn't be surprised in a few weeks to see that financial stocks have touched new post-crisis highs.

We keep hearing that these are the biggest reforms since the Great Depression, but that ain't saying a whole lot. What's the competition? Sarbanes Oxley? Remember the sweeping overhaul of energy trading and accounting after Enron imploded? Oh, that's right, there wasn't one. Remember how everyone stopped insider trading after the sweeping investigation in the 1980's that brought down junk bond king Michael Milken? I mean I assume nearly everyone stopped after that since I can't think of anyone the Securities and Exchange Commission busted after that until the arrest of Raj Rajaratnam last year.

But regulators now have new tools, we're told. There will be a new council watching out for systemic risks. How much do you want to bet on the chances they're going to find them?

The biggest reform appears to impact the market for derivatives. Most of them will now be traded on exchanges, and a central clearing party will make it more difficult for the market to take on massive bets they won't be able to cover, as happened most notoriously with


(AIG) - Get Report

. Still, banks will retain a healthy business in these products, even though they will have to trade certain derivatives out of affiliates -- a virtually meaningless change that nonetheless elicited tons of griping.

The dreaded "Volcker Rule," is in there, meaning banks can't do proprietary trading or private equity investing on their own. Still, they can invest in firms that do these things, and I can't believe it will take them longer than five minutes to find a way around the proprietary trading restrictions.

There are consumer protections, too, meaning banks will have to find new ways to nickel and dime their customers to death. They are already on the job, planning to end free checking accounts, for example.

The greatest overhaul since the Great Depression? The fact is that since the Great Depression, the financial services industry has grown from a biped to a millipede. For the first time since the Great Depression, it may have stubbed a toe on one of its 1,000 feet. You'd expect any insect to scream and yell in such a circumstance, as financial CEOs and their lobbyists have been doing for several months now. But don't confuse that screaming and yelling for meaningful change.


Written by Dan Freed in New York