Obama, who has drawn fire from Americans for bank bailouts that began under Republican President George W. Bush and continued by Obama, said the legislation's provisions make clear that no firm is protected because it is deemed "too big to fail" like AIG during the financial meltdown. "There will be no more taxpayer-funded bailouts. Period," he said. "If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy."

Ahead of the opening bell, futures were higher as investors took stock of last week’s hefty declines. They shrugged off more disappointing data on the US housing market, which showed that homebuilder confidence fell to its lowest level since April 2009 this month. John Stoltzfus, strategist at Ticonderoga Securities, said investors were viewing last week’s selling as an overreaction in light of the fact that all but three of the 23 companies in the S&P 500 that have reported since the start of earnings season have beaten analyst forecasts.

It seems that each new proposal for reforming Banking and Wall Street is more banker friendly – and ineffective – than the previous one. They are milquetoast, meaningless, appeasing nonsense. The reformers are in a race to see who can offer up legislation that is least offensive to bankers.

I welcome constructive input from folks in the financial sector. But what we’ve seen so far in recent weeks is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people.

The American people will not be served by a financial system that comprises just a few massive firms. That’s not good for consumers; it’s not good for the economy. And through this policy, that is an outcome we will avoid.

Make no mistake — this war will damage the nation’s psyche. Just look at today’s stock market. In fact, the war’s unforeseen consequences are just now beginning to appear. It’s bound to get very, very messy because in fact, contrary to the President’s assertion, the 2008 collapse had little to do with the dissolution of Glass-Steagall or proprietary trading by banks.

But the right way to fix this isn’t to erect some clumsy compensation apparatus to control pay on Wall Street (which won’t affect Goldman anyway because they don’t qualify as having received extraordinary assistance). The right way is to let them fail, as messy as that would be.

For instance, insured depositors are unlikely to “run” but they also freely deposit at the highest-yielding bank, not worrying about its credit risk. Thus, when regulators deem a bank as well-capitalized, the onus is on regulators that this be right. Markets may not have the incentive to gather this information nor possess the details of regulatory supervision that led to such an assessment. Conversely, when regulation allows itself to be arbitraged, the financial sector becomes more opaque exposing markets to unexpected outcomes.

“To the extent that lawyers are simply churning out the same problems one after the other and are treated as factors of production to be laid off or not because of market forces or marginal declines in profitability,” he said, “the emotional and professional commitment that goes along with being an adviser and a solver of problems begins to diminish.”

Your local Tennessee banks have been working hard for the last year, and will continue to work hard in 2009 to make sure they protect the assets of their depositors and shareholders, provide capital for local projects, and provide jobs for the 30,000-plus Tennesseans who work in the financial industry. I hope my fellow Tennesseans will think twice before taking out their frustrations with Wall Street on a banker from Main Street.