Though President Obama and the Democrats promise a fierce financial watchdog, what they’re delivering looks like a pretty tame pussycat.

There’s a disconnect between the Democrats’ tough rhetoric about the need for financial reform and the legislation that’s actually making its way through Congress.

Look at what just happened to the Consumer Financial Protection Agency during its sojourn through the House Financial Services Committee, under the guidance of its chairman, Rep. Barney Frank.

You know Frank. He’s the guy with the Boston accent you can always count on for the pithy, funny quote.

But what’s happening to the Consumer Financial Protection Act is no joke.

In one amendment, 98 percent of all banks (8,000 of 8,200) were exempted.

According to the National Community Reinvestment Coalition, that legislation was weakened in five important ways:

1. The original bill proposed a five-person executive board, four appointed by the president. The legislation now places major oversight authority back into the hands of financial regulators whose failures are the reason the new agency is being created.
2. Removal of the requirement that lenders provide simple “plain vanilla” products, such as fixed 30-year mortgages, on the grounds that doing so would stifle “innovations” in the financial marketplace – like the ones that helped cause the financial meltdown.
3. The failure to apply a “reasonableness” standard, which would require bankers to make sure borrowers understand and can afford the products they’re buying. Frank said in a memo that the “reasonableness” standard would put bankers in an “untenable position.” But as New York Times columnist Joe Nocera pointed out, this is exactly what brokers do when they sell stocks and bonds.
4. Exempts real estate brokers and agents.
5. Exempts car dealers. The reinvestment coalition contends that cars are the largest purchase for a typical minority household, and car dealers are infamous for abusive lending practices.

Businesses and financial firms lobbied hard against the bill, which they said would impose crippling and unnecessary regulations.

Frank, meanwhile, is making sure that there’s no trace of how some of the provisions were weakened. For example when the banks were exempted, it was done on a voice vote rather than a recorded vote, the Campaign for America’s Future Mike Elk reported.

That way, individual legislators can’t be held accountable for votes caving in to lobbyists that watered down the bill.

Frank did the same thing on legislation concerning regulation of complex financial derivatives the week before, allowing by voice vote a provision to ban the Securities and Exchange Commission and the Commodities Futures Trading Commission from putting the brakes on derivatives that seem too risky.

This is especially ironic if you watch the new “Frontline” documentary, “The Warning,” which focuses on how in the 1990s, the former head of the CFTC, Brooksley Born, cautioned that derivatives, including notorious credit default swaps, could cause problems if they weren’t regulated.

But she lost out to powerful economic advisers, including Larry Summers, now a key economic adviser to Obama. They warned that regulation would lead to financial disaster and waves of litigation. And the treasury secretary at the time, Robert Rubin, told Born she had no authority to regulate derivatives anyway.

“The Warning” is a grim reminder that robust regulation is less about the creation of a new agency than having a government that actually has the will and the stomach to go up against the institutions it’s regulating. If regulators had wanted to take action on derivatives in the 1990s they could have found a way.

The Democrats should not be content to create a toothless new agency and call it financial reform. Whose interests are they serving? Do they think we’re not paying attention?

They’re wrong if they do. Next week, a nationwide coalition known as Americans For Financial Reform is holding a protest in Chicago at the American Bankers Association meeting October 24 through 27, calling for more accountability, fewer bonuses and honest consumer protection that doesn’t just bark, but has real bite.