The nation’s labor movement is on target with its point that the risky practices on Wall Street were behind the destruction of 11 million jobs in America. Labor was equally on target with its demand that Wall Street must pay to create the jobs it destroyed.

The task the country faces now is how to make them pay. While curbs on outrageous pay for CEOs are helpful they will not do the trick. What we need to solve the greatest economic crisis since the Great Depression is the most sweeping finance reform since the 1930s so that Wall Street won’t be able to go back to business as usual.

Mass support for finance reform is so strong that it is likely some type of regulatory reform bill will be passed. The task for labor and its allies, however, is how to apply pressure for a bill that will have real teeth.

Wall Street and its GOP backers want to scale back if not scuttle the most important reforms. There are already some indications that their strategy might be to agree with the Democrats on setting up a Consumer Protection Agency in exchange for watering down other important measures.

One indication that this is what’s cooking is a recent meeting between some of Senate Majority Whip Dick Durbin’s staff and leaders of groups active in the fight for finance reform. Durbin’s staff urged the groups to expand their focus beyond the issue of consumer protection to include things like derivatives.

Durbin’s staff was saying, in effect, that given the anti-Wall Street mood of the country there is likely to be a few Republicans willing to break a filibuster, even for a good strong bill. Democrats, if this is the case, may actually have the power to rein in Wall Street. The question is whether they will use that power.

So far the White House and Democratic leaders in Congress have not clearly indicated which approach they will take: Will they fight for an aggressive, sweeping finance reform bill and dare the GOP to filibuster it or will they advocate a milder “bipartisan” bill.

Paul Krugman, the Nobel Prize winning economist, in a New York Times column today, pointed to some of the shortcomings in the Dodd bill:

“What the legislation needs are explicit rules, rules that would force action even by regulators who don’t especially want to do their jobs. There should, for example, be a preset maximum level of allowable leverage. There should be hard rules determining when regulators have to seize a troubled financial firm. There should be no exception rules requiring that complex financial derivatives be traded transparently.”

National Economic Council Director Larry Summers made a strong defense of the Dodd Bill yesterday, saying it will even eliminate the prospect of future bailouts of banks by the government.

Baseline Scenario’s Simon Johnson challenged Summers’ assertions. “Larry Summers is incorrect on three important dimensions of the Dodd legislation: it doesn’t insist institutions have much more capital requirements, it doesn’t restrict proprietary trading activities in any meaningful fashion and it doesn’t eliminate the prospect of a bailout,” he said.

AFL-CIO President Richard Trumka gave labor’s take on financial reform during an MSNBC interview last week. “Wall Street gave $145 billion in bonuses last year that aren’t anywhere geared to performance or job creation. So what we’re saying is that you destroyed the jobs and now you should pay to create the jobs. Part of it is a higher tax on carried interest. Hedge fund people are able to get away with a lower interest rate than what my 85-year-old mother paid in taxes a few years ago.”

The AFL-CIO says a tiny tax of three one hundreths of a percent on all financial transactions would yield many billions of dollars that could be used for job creation.

“I intend to be on Wall Street April 29 with 10 to 12,000 of my friends to take the message straight to the executives,” he said.

Photo: An image from Michael Moore’s “Capitalism: A Love Story.”