So now we have a financial reform bill—in the Senate wing of the Capitol building, at least. Hallelujah! The question now is, what can Congress do (apart from killing the bill in the House wing) to ensure that financial reform is made completely impotent?

After all, we can’t expect Congress to simply reform the failed system of financial regulation in any serious way—at least not if you subscribe to the theory that Congress is just too beholden to special interests to pass an effective financial reform package. Yet the public is still angry, so what’s needed is a kind of stealth dynamiting of financial reform.

That’s a tall order, but I have just the solution. The financial reform legislation creates a new consumer protection agency within the Federal Reserve and new mechanisms to detect financial risk. Those are good, solid steps forward. They may actually prevent future crises. So, assuming that survives in the House-Senate conference, why not expand the Securities and Exchange Commission, which failed to adequately supervise the banks and the equity markets, so that it can work its wonders in commodities, financial futures, options, and derivatives?

That awful idea arose again last week at a Senate hearing on the “flash crash” on May 6, which was attended by SEC chairperson Mary Schapiro and Gary Gensler, who heads the Commodity Futures Trading Commission, which regulates the futures and options market.

Senator Bob Corker, a Tennessee Republican, asked, “since you are both here, and it’s just the two of you, can you explain any rational reason that both the CFTC and the SEC exist?” Schapiro’s response was wordy, but it boiled down to a qualified “yes.” If it were up to her, she said, there would be just one agency. Headed by her, I presume.

Evidently this seems to be a trend. Only about a week ago, the idea was endorsed by Arthur Levitt, the former head of the SEC. He told Barron’s that merging the two agencies is "so basic to any kind of regulatory reform, that to neglect that is really outrageous."

Merger of the CFTC and the SEC is not a new idea. It was proposed in the wake of the 1987 market crash, when the idea was advanced by a committee convened by the New York Stock Exchange, headed by former Attorney General Nicholas Katzenbach. The idea was championed by Alan Greenspan, but was opposed by Wendy Gramm, who headed the CFTC at the time. She prevailed. The idea surfaced again in 2008, when it was supported by Chris Cox, then head of the SEC.