Wall Street still runs the show on Capitol Hill, even with the lessons learned from the Great Recession and the imperatives of the Dodd-Frank financial reforms.

The Securities and Exchange Commission adopted rules for those who operate hedge funds and other private investment funds, and then pared back its proposed oversight to the very largest.

These oh-so-clever devices - think mutual funds for the nation's wealthiest - have not been subject to review or reporting requirements. These murky investments ran into trouble before with messy, expensive consequences.

Regulators must expect the worst. No sizable investment, especially fancy market plays fueled by borrowing, stands in isolation. The more inventive the scheme, the greater the ripple effect when things go wrong.

That was not the argument the SEC heard from the financial industries and their minions in Congress: Rules intended to provide transparency for regulators and investors would be too expensive to implement and monitor. Timely, detailed reports would be too onerous for the fund managers.

The SEC and other policymakers genuflected toward Wall Street. Only the largest funds would have to parse out information. The cherry on top was elimination of penalties for perjury and deceptive filings.

SEC chair Mary Schapiro was upbeat as she predicted the new rules would give the commission and public, "insight into hedge fund and private managers who previously conducted their work under the radar, and outside the vision of regulators."

In a regulatory environment where reforms are watered down before they start, Schapiro's observation sounds inexplicably naive.