We can already see a tangible benefit from Arkansas Lt. Gov. Bill Halter’s decision to challenge Blanche Lincoln in a Democratic primary.

Until Tuesday, the big worry among proponents of derivatives reform was that Blanche Lincoln, the Arkansas Democrat who chairs the Senate Agriculture Committee, which oversees the regulatory body responsible for most current derivatives regulation, the Commodity Trading Futures Commission, would attempt to undermine the provisions already included in the Dodd bill. But on Tuesday, Lincoln, possibly mindful of a primary attack from her left flank accusing her of being too weak on Wall Street, surprised the conventional wisdom by recommending a set of proposals that are even stronger than what’s currently incorporated in the Dodd Bill. While some commentators are skeptical that Lincoln’s plan has any chance of real success, the New York Times did note that the outline “drew praise” from Republican Sen. Olympia Snowe.

Which may explain why Senate Minority Leader Mitch McConnell has been blasting away at the Dodd bill in increasingly vehement tones of frustration all week. If the Democrats hold firm, they only need one or two Republican senators to break ranks to score their second big legislative success this year.

Now, I still have no use for Blanche Lincoln, but this is the kind of economic populism that really ought to be at the heart of the Democratic Party in the South. Sure, we should expect a certain degree of social conservatism from southern Democrats because that’s just a reflection of the culture of the South. But that ought to be balanced out by a certain passion for sticking up for the little guy against massive (mostly coastal) corporate power. The Republicans will always be the more socially conservative party, so the way to compete in the South is to distinguish yourself from the Republicans on economic issues. This is the opposite, however, of the Blue Dog strategy. That is why people are surprised to see Blanche Lincoln take a hard-line on derivatives trading. This is the first smart thing I’ve seen Blanche Lincoln do since Obama took office.

Meanwhile, as I said yesterday, the Republicans are picking a stupid fight.

In return for that support [in cash donations to the GOP], the banks obviously want their main beef taken care of: eviscerating derivatives regulation. But given the role that unregulated trading of derivatives played in the financial crisis, the GOP is likely finding that arguing for weaker derivatives oversight looks just as bad as attacking consumer financial protection.

Their only option appears to be an impossible contortion: To attempt to stop financial reform altogether by claiming it is too weak, by saying, as McConnell did on Wednesday, that the bill “guarantees future bailouts of Wall Street banks.”

This is a display of hypocrisy that is impressive, even for the modern GOP. The big banks don’t want key portions of the bill passed because they fear their profits will be crimped. So to serve their bidding, the GOP is attempting to kill the bill by framing it as too friendly to Wall Street.

On an even playing field, the Republicans might just use their media advantage to pull off such a bold deceit, but they aren’t accounting for the ability of the president to drive the narrative. We have to look forward to the end game. The Republicans aren’t bargaining by offering their votes in return for weaker legislation. They are attempting to hold all their members in support of a filibuster. This is the Party of No strategy again. And there is no way they are going to pull it off this time. Frankly, the banks would be stupid to give them any money on this one.