Today, the House voted on a long-awaited financial reform package. House Speaker Nancy Pelosi announced: "The legislation says very clearly to Wall Street: the party is over." But is it?

The strongest part of the bill is the section that creates a Consumer Financial Protection Agency, which will crackdown on abusive lending practices for everyday financial products like mortgages, credit cards, and more. (Please help share our "It's NOT Such a Wonderful Life" video and sign our new petition [3].)

Abusive mortgage lending was a key cause of the economic meltdown and the new agency will help nip it in the bud. Another positive is that Rep. Ron Paul (R-TX) succeeded in getting his bill to audit the Federal Reserve into the financial package. The Federal Reserve has lent an estimated $2 trillion dollars to major financial services firms during the crisis, but has not disclosed who is receiving the funds and what collateral has been posted. For the first time, every item on the Fed's balance sheet will be publicly audited -- a major win for government openness and transparency.

But the bill has serious flaws. Rather than dismantling systemically dangerous "too big to fail" firms with the potential to collapse the U.S. economy, it puts then in the care of a counsel of "systemic risk" regulators. The bill authorizes the breakup of these dangerous firms, but only if they pose a "grave threat" to the economy. This sets too high a bar. Firms should be prevented from becoming so large they are hazardous to the public health and wellbeing. Amendments to limit the size of firms, such as one that would have limited firm's liabilities to 2% of GDP were ruled out of order. Bank of America, for instance, has liabilities on its books worth 14% of U.S. GDP. Also ruled out of order was an amendment that would have shrunk the size of these firms by re-instituting depression-era separations between commercial banking, investment banking and insurance. But the most troubling flaws in the bill are the ones involving derivative trading.

The bill requires derivatives to go through a clearinghouse to bring these transactions into the light of day. This would be a very positive step if it applied to all derivatives. However, derivative "end users" who are bona fide hedgers of commercial risk are exempt from regulation, this means an estimated 21% of the market will remain in the dark. Foreign exchange swaps are also exempt, another 8% of market.

The world's $600 trillion derivatives market is big and getting bigger. We can't afford loopholes this large and the Senate should move to close them. Derivatives that are essentially insurance contracts should be regulated as insurance; derivatives that are purely speculative should be subject to state gambling laws. Regulators should be able to ban swaps that are harmful to the system.

Without further action in the Senate, there is little doubt that Wall Street will eventually exploit the loopholes in the legislation to keep the casino rolling and keep the party merry and bright.