There is more good news than bad in the events surrounding the passage of the provision in the omnibus appropriations bill that weakens one provision of the financial regulations we adopted in 2010. The bad news is that the assault on the financial reform bill came earlier than I expected and, distressingly, with less resistance from the president than I assumed would be the case.

I had anticipated that the president would stand firm against any such retreat and that the Republicans would retaliate by reducing the funding for those agencies which administer the rules. In the recent bill the reverse happened.

The Republicans did agree to small increases for the relevant agencies – obviously better than a reduction but not nearly what was needed. But in return for this the president not only agreed to sign the bill which included the repeal, but along with Vice President Joe Biden, personally lobbied House Democrats to vote for it. Only a minority of them did, but it was a larger minority than should have been the case, and it was a crucial one because right wing defections for other reasons meant that House Speaker John Bohner needed these Democratic to votes to pass the bill.

And there is further bad news. The Senate Democratic leadership, influenced by undue concern for the views of the financial community, gave the necessary agreement to include the provision in the package in the first place.

But as disappointed as I was at that outcome, and as strongly as I tried to lobby my former colleagues to vote no, I am more optimistic than not about the future, based on how this played out.

The most relevant point is that there was a sustained public outcry against this, dispelling my fears that conservative efforts to dilute the bill by focusing on relatively obscure provisions would go unnoticed. The fate of financial reform going forward very much depends on whether or not public opinion will focus on the efforts by the Congressional allies of the financial industry to weaken it. Contrary to our expectations in 2010, a strong bill we had passed in the House in 2009 became even stronger in the Senate – where measures of this sort are usually weakened – because public opinion fully focused on it.

When we were first debating the bill in 2009, health care was taking up most of the public space. Because public attention was focused elsewhere, in December 2009, I was on the losing side of two votes on the floor of the House, weakening our regulation of derivatives, although not in a way that struck at the heart of what we were trying to do. But when the Senate was considering the bill, health care had already been enacted, and that meant the media gave its full attention to financial reform. In fact, the provision that was knocked out of the bill by the omnibus appropriations deal was the product of this focus.

My fear was that with the recession ending and economic growth resuming, the media would once again pay little attention to some of the technical, albeit important, aspects of the bill. My optimism is due to the fact that this was clearly not the case. I have not been asked to comment as much on a public policy question since the Supreme Court’s undoing of the Defense of Marriage Act. More importantly, sitting members of the House and Senate, led by Democratic leader Nancy Pelosi and Sen. Elizabeth Warren, organized a vigorous and well publicized opposition.

Obviously this opposition did not prevent the repeal, but it did succeed in one important way: it made clear that any further effort to weaken the bill will come at great political cost to those pushing it. I doubt very much that Obama will repeat the mistake he made in this case and agree to passing any further legislation that includes a partial repeal. He and the Democratic Senate leadership now know they underestimated the strong commitment to protecting what we have done among the public.

My optimism is strengthened by the fact that this strong reaction occurred even though the provision was not one of the major parts of the bill.

It restricts the ability of banks to conduct derivative transactions in the regular course of their business, which means in a manner that involves funds which are protected by Federal Deposit insurance. It is clearly preferable they conduct any such activity outside of that framework, although even with its repeal, there are strong safeguards that protect us against the kind of irresponsibility by AIG and other entities that caused the crash.

But beyond the question of substance, it is the stealthy procedure by which this change was accomplished that presented a great threat to financial reform. Setting a precedent in which the financial community can lobby the Congressional leadership – mostly Republican but, again, with the complicity of the Senate Democrats to put weakening provisions in larger bills was a grave error. Financial reform is still extremely popular with the public, and if members are forced to vote openly on whether or not to undo particular provisions, they will be very unlikely to do so. The danger in the method that was used this time is that members can support the legislation embodying the dilution while protesting that they personally did not think it was a good idea, but were “forced” to vote that way to keep the government functioning.

What we now know is that this method is not going to shield people from the criticism that will come if they try to repeat it, including Obama.

I very much regret the repeal of this provision, even though it was not one of the central tenets of reform, but I am greatly encouraged by the loud, sustained public outcry against the move. I believe that this demonstrates that even with the Republicans controlling both Houses, it will be very difficult for them to move further in this direction next year.

Barney Frank is a retired congressman and the author of landmark legislation. He divides his time between Maine and Massachusetts.

Twitter: BarneyFrank

– Special to the Telegram