At the end of last week, the U.S. Senate passed a financial reform bill that was far stronger than what had been proposed by the Obama administration and passed by the House. Now it's time to hold President Obama's feet to the fire to ensure the strongest possible bill.

Not long after the financial crisis, it was clear that the "solutions" that would emerge from the administration would be weak. With Tim Geithner [3] and Larry Summers [4] in the driver's seat it was clear that there would be no bold transformative vision, no "New Deal" for the 21st century, but tweaks like a "systemic risk regulator" that would somehow endow failed regulatory bodies with the foresight needed to predict the next crisis and the back bone needed to take decisive action.

The Obama team set such a low bar on structural reform that public interest groups despaired. But a funny thing happened on the path to weak-kneed financial reform: democracy got in the way.

Voters Strengthen the Bank Bill

Two critical elections were held that raised the bar on financial reform. The first was the special election held to replace Massachusetts Senator Ted Kennedy [5]. Republican Scott Brown [6] swept into power in this democratic stronghold with a populist appeal against big bank bailouts. The very next day, Obama declared his support for the "Volcker Rule," a measure to crack down on risky proprietary trading. Even though the rule was opposed by Geithner and Senate leadership, it miraculously worked it's way into the Senate reform bill without a vote.

The second election is still underway. On June 8th, U.S. Senator Blanche Lincoln [7] (D-Arkansas) faces a run-off election against Lt. Governor Bill Halter in the democratic primary. Halter was inspired to enter the race because of Lincoln's destructive role in the health care debate, where she blocked progressive reforms. Halter's meteoric rise in the polls and his successful fund raising among unions, MoveOn and other progressive groupings demonstrated that he was a serious contender. And when he took to the airwaves pounding Lincoln on her cozy relationship with the big banks, the Lincoln campaign needed a compelling response.

She canceled fundraisers and denounced Goldman Sachs. More importantly, she used her position as chair of the Senate Agriculture Committee to put forward the most radical reform to the banking bill yet proposed. Lincoln decided that the best way of separating big bank gambling from the taxpayer guarantee is to force the big banks that are responsible for most derivatives trades, to spin off their trading desk into a separate corporate entity. They can continue to gamble, but the taxpayers will not be on the hook for their bad bets. In one fell swoop, her language restores much of the firewall between Wall Street gambling and Main Street banks, reins in reckless derivatives trading and shrinks the size of behemoth banks.

Lincoln herself said she thought her proposal would get stripped out in the Senate, but it stuck due not only to her tenacity but also because she and Halter were engaged in a tight primary. (In the end Lincoln won by a narrow margin of 44-42 forcing a runoff). If her proposals survive conference committee, it will be due in large part to the fact that she is still facing the voters. Win or lose, Halter's legacy may well be the best financial reform measure put forward by any nation in response to the crisis that devastated the lives of so many.

The Obama Administration Wants to Kill the Best Provisions

Lincoln's proposal has come under fire from all fronts. Big bank lobbyists went ballistic, of course, and they will admit that getting her language pulled from the bill is still their top priority. Behind the scenes, it is also the top priority of the administration and the Federal Reserve. Believe it or not the administration is fighting to preserve its ability to bailout any financial institutions that gets in trouble, not just commercial banks. Yep that is right. Instead of clamping down Wall Street gambling, the administration wants to keep reckless institutions on the teat of the Federal Reserve.

The battle lines are drawn. The biggest threat to Lincoln's language now is the Obama administration and the Federal Reserve [8]. There will no doubt be a move to strip out the strong Lincoln language in conference committee, where the House and Senate versions of the bank reform bill now go to be aligned.

On the surface, Congressional leadership is making all the right noises. "This is one of those rare occasions when the two bills really are very close to each other," said Mr. Dodd, a Connecticut Democrat. "There's not a great deal of difference. We need to take the best parts of both bills and marry them together and present our colleagues in both chambers with our final product." Great, perfect. The easy way forward, of course, is to take the best provisions in both bills and advance the measure for a final vote, but this will not happen if the Obama administration continues to oppose the Lincoln language.

Taxpayers must refuse to back the Wall Street casino and tell Congress in no uncertain terms that a bank bill without strong derivatives reform is not a bank bill worth having. We need to make sure that the conference committee is televised and every change is subject to a roll call vote. With all eyes on financial reform, we may yet achieve structural reforms worth celebrating.