That’s the answer I got when I asked Magic Eight Ball whether our beyond-worst-case financial catastrophe will result in effective financial regulatory reform.

You try it. But the answer matched the feeling I’m getting reading the excellent reporting on Washington turf battles and White House deliberations over what to do about our do-nothing regulators—whether to fold agencies, create new ones, or what.

The Journal’s Damian Paletta leads the way this morning with news that the Obama administration is backing off from a major consolidation of agencies in favor of sticking with the ones we have and giving them broader powers.

The administration, for example, is unlikely to call for merging the Commodity Futures Trading Commission and the Securities and Exchange Commission, an idea it had considered, these people say. It also isn’t expected to call for the Federal Reserve, Federal Deposit Insurance Corp. or the Office of the Comptroller of the Currency to cede their primary authority to supervise banks, they say.

I guess I don’t have an opinion, other than to observe that merging two failing companies in the private sector doesn’t usually help much, anyway. The CFTC couldn’t regulate derivatives; The SEC wouldn’t regulate investment banks.

But, still, one looks for something dramatic. I mean the OCC not only didn’t regulate mortgage lending, as this fine WSJ story from 2007 makes clear, but actively fought—for years, to the Supreme Court—state regulators who wanted to. So, again, one looks for bureaucratic consequences, or something.

Here’s a good quote:

“It’s not only an opportunity, they are avoiding a necessity,” says Hal Scott, a professor at Harvard Law School. “I understand all these political forces — they’ve been obstructing necessary change for decades. But we are in a very serious situation. The regulatory system has demonstrated its inability to function, and I really think its incumbent on somebody to do what’s right.”

But opposition comes from the Senate’s old bulls:

Top lawmakers have already signaled there would be little political support for getting rid of multiple regulators and centralizing power.

“There are a lot of other issues you want to talk about, it seems to me, before settling on a ‘number’ ” of regulators, Senate Banking Committee Chairman Christopher Dodd (D., Conn.) said in an interview. “What are their functions?”

What indeed?

The Washington Post has a useful explainer on how various interest groups are lining up in the overhaul fights.

A key sign of real change in the offing, it seems to me, will be if Congress creates a financial products safety commission. The financial-services industry is, understandably, opposed:

“The system is weakened when you separate regulation of the institution and the product. Each regulator would only have half the necessary information,” said Scott Talbott, a top official with the Financial Services Roundtable, a major financial lobby.

Having covered the insurance industry in the wake of Hurricane Katrina, I have seen how at omnibus agencies, particularly those funded by the industries themselves (as bank and insurance regulators are), consumer protection becomes an afterthought, and that is putting it kindly.

Another debate to keep an eye on, the Post tells us, is whether to let the Fed take the lead as a systemic regulator or Congress creates some kind of council of regulators, favored by smaller banks.

The differences between big and smaller banks are mirrored in the federal government itself. Treasury Secretary Timothy F. Geithner, a former president of the New York Fed, advocates naming the Federal Reserve as systemic risk regulator. But the other federal and state bank regulators fear the Fed could trump their powers. So these other agencies, like the smaller banks they oversee, have come out for the council of regulators.

In the end, though, it comes down to a political question, doesn’t it? Does the government really wants to regulate, or not? The Journal reports that the Office of Thrift Supervision—regulator of the late Washington Mutual and the late IndyMac—may be on its way out, and that’s fine. But maybe it would have done better if the guy in charge hadn’t come to a 2003 press conference on reducing lenders’ “regulatory burden” carrying a chainsaw.

The Audit has been impressed with how, after years of blowing off regulatory coverage, the MSM is making up for lost time with extensive coverage, particularly in the Journal and the Times, of Washington jockeying over financial reform. More, please.

Ends today: If you'd like to help CJR and win a chance at one of
10 free print subscriptions, take a brief survey for us here.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.