“With regard to financial reform, the outcome of the November election seems straightforward. At the presidential level, the too-big-to-fail banks bet heavily on Mitt Romney and lost; President Obama received relatively few contributions from the financial sector, in contrast to 2008. In Senate races, Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio demonstrated that it was possible to win not just without Wall Street money but against Wall Street money.

More broadly, this political shift coincides with and matches a significant change of views within the regulatory community. To pick these up, you need to listen carefully, but the signs are unmistakable.

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At the Treasury Department, however, the tone and the content of messages on financial reform sound increasingly discordant. Recent signals suggest that appeasing powerful players within the financial sector is still high on the agenda for Treasury Secretary Timothy Geithner.

See, for example, the recent decision to exempt foreign-exchange swaps and forwards from the rules that will apply to most other over-the-counter derivative transactions. Read the response by Dennis Kelleher of Better Markets; he is exactly on target, as usual. I join him in recommending the reporting by Silla Brush of Bloomberg News on the issue.”

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Read Simon Johnson’s full post here