I often get asked a Wall Street variation of the Ronald Reagan 1980 campaign saw, “Are you better off than you were four years ago?”

To wit: Are we safer than we were four years ago? Will the 2010 Dodd-Frank law and the regulations that the Securities and Exchange Commission and the Commodity Futures Trading Commission are busy writing and rewriting prevent a recurrence of the kind of financial meltdown that we experienced in 2007 and 2008?

Just as in November 1980, the answer is easy: a resounding no. Neither Dodd-Frank nor the Volcker Rule nor bank-capital requirements nor the other regulations that will ultimately get written -- with a lot of help from Wall Street’s lawyers and lobbyists -- will change the behavior of the hundreds of thousands of bankers, traders and executives who work on Wall Street and who do the things every hour of every day that slowly but surely have had a tendency to lead to the collective action that cause financial crises.

People are pretty simple: They do what they are rewarded to do. At this very moment on Wall Street, smart, well-educated people are being rewarded to take big risks with other people’s money. Because that’s what they get paid to do -- often in the millions of dollars each year -- it is hardly surprising that they continue to do it.

Need some evidence? President Barack Obama signed the 2,300-page Dodd-Frank law nearly two years ago, in July 2010. At the time, with great bravado, he said, “These reforms represent the strongest consumer financial protections in history. In history.”

Corzine’s Folly

Since the law has been in place, here are some of the things that have happened (that we know about): At the end of October 2011, the commodities and futures broker-dealer MF Global Holdings Ltd. filed for bankruptcy -- and is being liquidated -- the largest collapse of a financial company since Lehman Brothers Holdings Inc. The chief executive officer of MF Global was Jon Corzine, a former co-CEO of Goldman Sachs Group Inc., a former senator and governor of New Jersey, and an oft-rumored candidate to replace Tim Geithner as secretary of the Treasury. Could anyone have a more gold-plated resume?

So what did Corzine do? He ratcheted up the financial risks the formerly sleepy firm was taking, and ran it into the ground by making a huge, leveraged bet on the risky sovereign debt of European countries. When the market discovered the extent of Corzine’s bet, and how leveraged it was and what might happen to MF Global’s capital if he was wrong, investors, creditors, counterparties and customers ran for the exit.

On Oct. 31 the firm collapsed, taking with it billions of dollars in shareholders’ and creditors’ money as well as 3,000 jobs. Oh yes, $1.6 billion more in customers’ funds has disappeared -- a mind-bending violation of the rule that customer money should never be mingled with other corporate funds to make payments in the ordinary course of business. Corzine badly damaged the few remaining shreds of confidence that customers and investors had in our capital markets.

What else has happened? Well, as we all know now, Jamie Dimon, the presumptive King of Wall Street, directed JPMorgan Chase & Co.’s chief investment office into risky and riskier investments in a swashbuckling effort to increase profits for his bank -- again, exactly what his compensation structure rewarded him to do. But this was not his money -- it was his depositors’ and shareholders’ money. For a while, the strategy worked well: adding billions of dollars in profits to JPMorgan Chase’s bottom line.

Haywire Strategy

Then, this spring, the strategy went haywire after a group of highly compensated, high-flying traders in London made a big bet with some of the money on an esoteric “synthetic credit portfolio.” The losses on the bet -- $3 billion and counting -- have not proved an existential threat to JPMorgan Chase, in part because it is the biggest of the too-big-to-fail banks. The bet has wiped about $27 billion off the company’s market capitalization -- sorry, shareholders -- and once again shaken our confidence that Wall Street is anything more than a giant casino in which bankers take huge risks with other people’s money.

Why does this kind of gambling continue unabated? Why does Wall Street continue to serve best the people who work there at the expense of the entrepreneurs and businessmen who actually rely on our markets to provide their businesses with the capital needed to hire workers, build plants and equipment, and try to provide people with a better life?

For that answer, one need look no further than the kind of slobbering, fawning comments that many members of the Senate Banking Committee -- on both sides of the aisle -- used to greet Dimon during his two-hour hearing last week.

Instead of pushing him to explain why, two years after the signing of the Dodd-Frank law, he encouraged his bankers and traders to take risks that shouldn’t be taken with his depositors’ money, we got this from Senator Jim DeMint, Republican of South Carolina: “We can hardly sit in judgment of your losing $2 billion. We lose twice that every day here in Washington. And plan to continue to do that every day. It’s comforting to know that even with a $2 billion loss in a trade … your company still, I think, had a $19 billion profit. During that same period, we lost over $1 trillion.” He concluded: “So the intent today is really not to sit in judgment but to maybe understand better what happened.”

Good Lord, can this really be happening?

(William D. Cohan, a former investment banker and the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. The opinions expressed are his own.)

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To contact the writer of this article: William D. Cohan at wdcohan@yahoo.com.

To contact the editor responsible for this article: Tobin Harshaw at tharshaw@bloomberg.net.