Some random notes on the debate over reforming the financial system. The Brits continue to lead the charge on the bank tax–perhaps driven by the fast-approaching elections in which, if you believe the polls, the ruling Labor Party is going to lose its governing majority…perhaps a harbinger of things to come here. So, Gordon Brown is fairly focused on this and Labor and the conservatives are making the head of Barclays Bank an example of greed:

The American president of Barclays PLC has become a political punching bag with U.K. national elections likely a month away.

Bob Diamond, a prominent U.K. bank executive, is under attack from politicians of both leading British parties for what critics deride as his outsize pay package.

"It really beggars belief that two years after we all bailed them out, we get the Barclays Bank chief paying himself £63 million," said George Osborne, the Conservative Party’s would-be Treasury minister, in a nationally televised debate last week. (In reality, unlike some rivals, Barclays didn’t receive a direct government bailout.) Another broadside followed this Easter weekend. Lord Peter Mandelson, a senior Labour Party leader, blasted Mr. Diamond as "the unacceptable face of banking" in an interview with the Times of London. "He hasn’t earned that money. He’s taken £63 million not by building business or adding value or creating long-term economic strength, he has done so by deal-making and shuffling paper around."

   Paul Krugman scores the Senate regulatory reform bill:

Not good enough. It’s a good-faith effort to do what needs to be done, but it would create a system highly dependent on the wisdom and good intentions of government officials. And as the history of the last decade demonstrates, trusting in the quality of officials can be dangerous to the economy’s health.

Now, it’s impossible to devise a truly foolproof regulatory regime — anyone who believes otherwise is underestimating the power of foolishness. But you can try to create a system that’s relatively fool-resistant. Unfortunately, the Dodd bill doesn’t do that.

   I have been critical of the Dodd bill–largely because it empowers the Federal Reserve Board, without changing the culture and mindset at the Fed, which is far too attuned to Wall Street’s needs. I am also not convinced that Krugman is right that the problem is not the "too big to fail" challenge. In looking at the "too big to fail" issue, I think it’s not just a question of the mechanics of how to rescure big banks. It’s the very idea of the banking structure. I still believe that it is much better to restructure the banking system back to community and regional banks largely to refocus banking on Main Street–not the constant thirst for profits from currency and trading manipulation engineered half away around the world.