Something strange and a little disorienting is happening in the fight to reform Wall Street: It looks like the reformers are actually starting to win.

This is not something you could have said as recently as six weeks ago. Back then, House Financial Services Committee Chairman Barney Frank had just released a proposal to regulate derivatives, essentially bets on the movements of other assets (like stocks, bonds, commodities) or interest rates. Derivatives are in some respects the key battle in the broader regulatory campaign. They were at the center of last fall’s financial crisis--Lehman’s balance sheet was stacked with them, and they triggered AIG’s collapse. But because they’re so poorly understood by the general public, the fight has unfolded almost entirely in Congressional backrooms, where the banks and their lobbyists naturally have the upper hand.

Frank’s "discussion draft" seemed to reflect that. The proposal the Obama administration unveiled this summer would have forced banks and hedge funds to trade derivatives on exchanges and “centrally clear” them. Clearing means inserting a well-capitalized middleman between two parties on either side of a trade. When derivatives trades are cleared, the failure of one institution doesn’t threaten everyone else it has traded with, which is what happened with Lehman. The only downside is that clearing requires the trader to post margin--a kind of cash cushion--to the middleman, which they’re generally loath to do. Before long, dozens of companies were flocking to Congress to plead their case.