I spent several hours yesterday pouring over two documents. The first, the Obama Administration's report on Financial Regulatory Reform, outlines a "sweeping overhaul" of the laws and regulations which govern our banking and investment system. The second, the letters written to U.S. District Court Judge Denny Chin by people who lost money invested with Barnard Madoff. The letters tell their stories and ask that Judge Chin consider their plight when he sentences Madoff on June 29th.

The letters are poignant. Some tear at your heart. Many stress that they come from "ordinary people". Not millionaires for whom the Madoff account was one part of a vast holding. But individuals who put their entire retirement savings in Madoff's hands, believing that this long established money manager would provide the expertise needed to create a secure and diversified portfolio. Some note that the Securities and Exchange Commission admits it investigated complaints against Madoff as long ago as 1999, but that no formal action was taken.

Others complain about the time the Securities Investor Protection Corporation, a government-chartered agency financed by the brokerage industry, is taking to process their loss claims. Some argue that the value SIPC is placing on their loss is being unfairly calculated.

How, I wondered as I read on and on, would the reform proposals made public Wednesday by the Administration, have prevented the Madoff scheme? Not at all is my sad conclusion. I have a boss who, when we are discussion a possible story idea, always wants to know "Is there any there, there?" There is some rule tightening. There is a recognition of the fact that some institutions are so large and interconnected they can bring down the whole system if they get in trouble. But there is little "there" here in terms of new regulation that would restrict their risky actions.

I certainly like the idea that anyone who creates and sells new securitized products, like those bundles of mortgages of unknown quality, has to retain 5% in their own portfolio. That's like the King who makes sure the cook eats from the same tray! But where are the rules to review these products for viability and transparency? Why aren't we forcing all derivatives to trade on an established market? Isn't it a conflict to allow investment banks to trade for their own accounts? And speaking of conflict, where is the new oversight of the rating agencies, whose calls on some of the "new fangled" products have been worthless to investors even as they are profitable for the rating companies themselves?

We have an opportunity to streamline the bureaucracy. Instead we have piled more bureaucrats on top of the stack. What Robert Albertson, Chief Strategist of Sandler O'Neill so eloquently called "Rearranging the deck chairs" on our program Wednesday would not have helped the Madoff victims one bit. The SEC had the information on Madoff. It lacked the motivation.

We don't need more regulators. We need regulators who take their job seriously; regulators willing to make a career in public service, not using the job as a stepping stone to a future position on Wall Street. We need to give them support. That means we need to pay them well, give them the right tools, and provide them political cover. Let's see now if Congress will put some real teeth into these "reforms".

Will the Wall Street masters of the universe scream? Sure. Will some of the opaque "innovative" products gravitate offshore? I can only hope so. And I hope the rocket scientists who create them pack up and move out as well.

It's a matter of self-defense.