FORTUNE -- So many words ... so little clarity. That may be the best summation of the financial regulatory reform bill. The legislation weighs in at 848 pages (at least the electronic version does). Compare that with, say, the Constitution of the United States, which founded the legal principles of our nation nearly 223 years ago. That original document (handwritten, naturally) clocked in at just four pages. Granted, the Founding Fathers wrote in small print. But come on. Four pages to run a country, vs. 848 pages to run a bank? Really?
And in its 800-plus pages,the FinReg bill manages to create even more questions than it answers. Like what defines "risky" behavior for the banks, when an institution is too big to fail, and what the competitive field will look like in the new financial world. On many of those basic questions, the new legislation essentially punts, leaving the decisions to be determined by the regulators at some future point. And that means that instead of clarity, this law makes the financial landscape even hazier.
"So much is left to be defined," laments Randall Kroszner, an economics professor at the University of Chicago's Booth School of Business. He's spent some time poring over the legislation because in his former life, as a Federal Reserve Board governor, he would have been one of the regulators charged with implementing it. In this case, he says, the rules are yet to be written: "The legislation mostly kicks the can down the road."
That's bad news, because what markets crave more than anything is clarity. In fact, even though analysts such as Betsy Graseck at Morgan Stanley expect the FinReg legislation to chop 11% off the big banks' earnings by the year 2011, the stocks actually rallied when it looked as if the congressional conference was settling in on a final version of the bill. Shareholders apparently figured a final version of the bill beats the unknown. But in this case, the relief rally may have come too soon, because so much is left to be decided.
The bankers are keenly aware of that. As the legislation was on the verge of being signed, a range of business leaders pointed out that they really don't know how financial reform will play out for them or their companies. In J.P. Morgan's quarterly earnings release, for instance, chairman and CEO Jamie Dimon noted that there are still "hundreds of rules to be written." And John Taft, chairman elect of the Securities Industry and Financial Markets Association and head of RBC U.S. Wealth Management, notes that the law will require over 250 rules to be made by more than a dozen regulatory agencies, some of which have yet to be created. "It's the single largest delegation of rulemaking authority by Congress to regulators in modern history," Taft says. (See editor's note at bottom.)
Of course, there is a silver lining to Congress's punting, and the bankers know that as well. Taft admits it could have been much worse: Congress could have actually ruled on all these decisions itself, instead of leaving it up to regulators who are much more familiar with the industry and how the markets work. "The world today is different than the world will be tomorrow," says Taft. "Things change, and people who are regulating the financial services industry need to be able to adapt."
In the end, the true skeptics say, none of it will matter. Danny Blanchflower, who used to sit on the Bank of England's interest-rate-setting committee, says history has seen reactionary measures like this play out again and again. He compares FinReg to the Maginot Line, the outdated French defense system that came short of stopping the German advance in World War II.
"I think FinReg is broadly irrelevant," says Blanchflower, who is now a Dartmouth economics professor and research associate at the National Bureau of Economic Research. "What we do every time is protect ourselves from the last financial crisis." What he's worried about -- and what all of us should worry about too -- is what the next financial crisis will look like. And chances are you won't find any glimpses of that in the 848 pages of this bill.