The change to the so-called swaps push out rule, section 716 of the Dodd-Frank Act, will allow banks to keep additional derivatives contracts inside their federally backstopped subsidiaries. That will give them funding advantages over nonbank competitors.
But Bernanke and others argued that it would also reduce overall risk in the system. And defenders say other aspects of Dodd-Frank expressly forbid taxpayer bailouts for derivatives. The Volcker rule covers some of this same territory.
Banks clearly wanted this—JPMorgan CEO Jamie Dimon would not have been working the phones to get the cromnibus passed if they didn't—but it is hardly a massive rollback of all of Dodd-Frank. In fact, the language previously passed the House with lots of Democratic support.
So think of it this way: Wall Street needed a giant, must-pass spending bill to ram through a somewhat uncontroversial change they've been working on for half a decade.
And they did it at huge cost.
The energized progressive left, led by Massachusetts Sen. Elizabeth Warren, nearly stopped the cromnibus in the House, requiring a last-minute flurry of lobbying by the White House, Dimon and other supporters of the bill. The measure's future is also not certain in the Senate, though it's likely to pass Friday or Saturday.
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The near-death experience of the cromnibus shows how power in the Democratic Party is leaching away from centrist, pro-Wall Street types and toward populists who will fight anything that smacks of bank favoritism tooth and nail.
In fact, Wall Street loses this one by winning. Warren will be even more powerful by being able to say "the banks won again" and citing Dimon's unwise phone lobbying. This could push her closer to a presidential run against Hillary Clinton or at the very least push Clinton further left to avoid a Warren challenge.
And the idea that this is the first crack in the Dodd-Frank wall that will lead to further rollbacks when the GOP takes total control of Congress is probably also wrong. President Barack Obama is now hemorrhaging support on the left from Democrats who feel sold out over the swaps provision. He's not likely to want to further alienate people by cutting deals with the next Congress that include signing bills with stuff he wants that also curtail parts of Dodd-Frank.
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Obama will soon start focusing on his legacy and the two most important pieces of it are the health-care law and financial reform. If the GOP Congress tries to roll back major pieces of Dodd-Frank in 2015 and 2016, expect to see the veto pen come out of the Oval Office drawer.
There will be significant pressure on the White House from Hillary Clinton and her many supporters inside and outside the administration to protect Dodd Frank as well. The last thing the Clinton camp wants is more outrage on the left about handouts to the banks increasing the clamor for Warren or some other avatar of the left to get in the race. And the more Clinton gets nudged left, the harder it will be for her to tack back to the middle for the general election.
So it's not at all likely that Republicans will be able to succeed in getting any significant bank regulatory changes past Obama's desk over the next two years.
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And don't forget that while the nation's largest banks appear to have won their long and costly war to get this derivatives change through, they also this week faced the looming prospect of big and costly new capital surcharges to be imposed by the Fed on "systemically significant" financial institutions. That could easily swamp any funding advantages they get from the cromnibus victory.
Put it all together and the reputational hit banks will take from their swaps victory coupled with the energy they are driving to the progressive movement and losses they are taking elsewhere and the idea that Wall Street "won" this week looks pretty ridiculous.
—By Ben White. White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.