Two years into the worst recession since the Great Depression, Main Street America is still struggling to get back on its feet while business on Wall Street and K Street is better than ever. 

[IMGCAP(1)]Indeed, the contrasting fortunes between those who caused the Great Recession and those who suffer its effects were on clear display this month, as a vaunted yet compromised financial regulatory reform bill was finally approved by Congress. 

While July unemployment figures showed nearly 10 percent of Americans remain without work, about 2,000 lobbyists were well-employed in Washington, D.C., at the behest of Wall Street banks as part of a $600 million campaign by the financial sector to ensure its interests were well-represented in the final bill. 

The legislation was a response to the 2008 financial crisis, which economists believe was partly caused by the unprecedented risks assumed by banks in the decade since federal restrictions on commercial-investment bank consolidation were lifted. 

To mitigate such risky behavior on the part of commercial banks, the bill contained a version of the Volcker Rule, proposed by former Federal Reserve Chairman Paul Volcker against strong opposition on Wall Street. Yet in the bill’s fine print, that rule was significantly scaled back, and with it the assurance that future speculative investing by commercial banks will be curtailed.

In its original conception, the Volcker Rule would have reinstated key elements of the 1933 Glass-Steagall Act, whose purpose until repeal in 1999 was to prevent the kinds of high-risk speculative investments that led to the Great Depression and Great Recession alike. 

But by scaling back the Volcker Rule to permit commercial bank investing of up to 3 percent of their assets in hedge funds or private equity groups, the new law allows banks to continue with roughly the same amount of proprietary trading as they engaged in before the crash. For those few banks that will be required to scale back proprietary trading under the rule, the deadline for final compliance is 2022. 

This provision and the repeal of Glass-Steagall a decade ago provide a sobering case in point of the costly co-dependency between Wall Street and Washington — and the need for fundamental reform not just of high finance, but also of the way we fund campaigns.

Consider the numbers: From 1990 to 1998, the commercial banking and investment community contributed $232 million to federal candidates while actively lobbying Congress to overturn the Glass-Steagall Act. In the decade since 1998, those same interests increased their political giving threefold to $686 million. 

The leading beneficiaries of Wall Street’s largesse, regardless of party, were members of the oversight committees charged with regulating the financial system; indeed, in every election cycle since 1990, Wall Street contributors directed more of their money to the political party in power. 

What’s more, in a revolving-door tradition that has become commonplace in Washington today, two of the three lead sponsors of the legislation to overturn Glass-Steagall, along with hundreds of Congressional staffers involved in regulatory policy, subsequently accepted jobs lobbying on behalf of Wall Street. It remains to be seen how many of the current crop of lawmakers and staff will follow suit as the all-important rule-making process begins. 

As Senate Majority Whip Dick Durbin (D-Ill.) last year observed of the banks and Congress, “They frankly own the place.”

To address the root problem and protect against future abuses of the policymaking process by the nation’s biggest banks, Congress must end its costly reliance on Wall Street money to fund campaigns. The bipartisan Fair Elections Now Act would do just that by enabling qualified candidates to run for public office by accepting only donations of $100 or less from their constituents, matched with federal funds. Already, Durbin and more than 175 Members of Congress have co-sponsored this legislation, and a similar number of their challengers have pledged support. They are joined by a bipartisan committee of leaders in Washington and Wall Street alike who are fed up with the corrupting influence of money over our political system, including Volcker and former Commerce Secretary Peter Peterson. 

If Congress and the president are sincere in their commitment to avert another financial crisis, they must extend reform beyond Wall Street regulation alone to the very political system within which policy is made. A Fair Elections system that replaces Wall Street-funded campaigns with small constituent donations and matching public funds is a logical next step. 

Daniel Weeks is president of Americans for Campaign Reform.