But it is increasingly evident that there may be something more sinister going on behind the scenes that is driving this debate.  The President trotted up to New York to give a big televised speech and scolded Wall Street for “resisting reform” saying that if we are to prevent another crisis, we must pass his bill.

The whole charade amounted to little more than political theater.  Big Wall Street banks actually WANT this bill.  Executives for Citigroup and Goldman Sachs (two firms that both received bailout funds) have both made statements in favor of Obama’s financial reform bill.

So, one must ask, if this is so draconian on Wall Street, why do they want it so badly?  The answer to this question is in the details of the bill: Not only does this bill not rein in big Wall Street banks, its actually a very big gift to Big Banks and other special interests—gifts that will cost Main Street, the taxpayers and consumers.

The large financial institutions at the root of the financial crisis wouldn’t even be regulated by the CFPA. Their oversight would remain at the porn-surfing Securities and Exchange Commission. But of course the bill is full of burdensome regulations for smaller institutions with which they will struggle to comply and also remain profitable.  The larger banks that are covered will not only have the resources to adapt but will also likely grow even larger by swallowing up smaller institutions that can’t make it.

But big banks aren’t the only ones receiving special favors. Mark Calabria of the Cato Institute highlighted some egregious examples of special interests using this bill as a vehicle for their own desires in a recent NY Post article, saying:

Remember the mortgage crisis? Well, the primary consumer-protection law for homebuyers is the 1974 Real Estate Settlement Procedures Act. The law requires the timely, accurate disclosure of relevant closing costs and prohibits “kickbacks” for the steering of settlement services.

For example, your real-estate agent cannot, under RESPA, be paid a fee for steering you toward a certain home inspector, title company or other closing service. Yet, under the Dodd bill, real-estate agents would be exempted from RESPA. If that weren’t bad enough, the Dodd bill exempts insurers and attorneys — both now subject to RESPA — from its consumer protections, too.

So, the big banks are not only getting off scott-free, but they, real estate agents, title companies, lawyers and other special interests are attempting to further rig the system permanently in their favor.

And if all the advantages given to the banks in this bill still aren’t enough to help weather the consequences of their risky behavior?  Well, that’s what the bailout language is for. The Barney Frank bill authorizes up to $4 trillion dollars in lending authority for the Fed. Dodd’s bill gives them a blank check with no limit.

But these gifts come at a cost. And the bailouts are only the down payment.  The Obama-Dodd bill would give the government unprecedented reach into the business place and create real harms on Main Street.

• Local community banks will be subject to at least 27 new regulations that could put many of them out of business.
• Harley-Davidson is worried that its dealer-financed loans to bikers will fall victim to new federal financing regulations.
• eBay may be harmed by restrictions on PayPal, a subsidiary, in moving money in the Internet marketplace.
• Small businesses that rely on credit cards, small credit lines, home equity loans and other types of credit will lose access to these life lines that keep their businesses operating—and employing workers.

But, Wall Street gets the bill that it wants. And that’s what’s important right? Apparently it is for those pushing this bill.

Everyone wants to avoid a new financial crisis (except perhaps Goldman Sachs and John Paulson who made billions on it). But the manner in which that is done is crucial.

Rather than addressing the root causes of the crisis, this bill avoids them entirely.  Rather than addressing the entities involved with causing the crisis, this bill rewards them and harms Main Street. Rather than doing away with too big to fail, this bill encourages risky behavior and makes big firms even bigger by rigging the system in their favor against community banks and other small lending institutions.

All of which is why Wall Street wants it so badly.  Because as anyone who watched the Senate hearing with Goldman CEO Blankfein understands, Wall Street knows how to spot a “sh$%^y deal” so this one must be a sweetheart.

Dodd’s plan for overhauling Wall Street regulations, released mid-November, includes a proposed new organization: the Agency for Financial Stability (AFS). This new regulator would be tasked with identifying and addressing “systemic risks posed by large, complex companies as well as products and activities that can spread risk across firms.” This represents one piece of the most extensive proposal to reform financial services regulation—topping even the ridiculousness of the Obama plan and Barney Frank plan. Which is saying a lot.

An Agency for Financial Stability would enjoy unprecedented power over the private sector. To read what kind of power, and how Dodd’s AFS would have the authority to treat Wells Fargo or UBS like Al Capone and the Bonanno crime family, see my recent article at Reason Online.