It all seems reasonable. New rules from the Fed, OCC and FDIC would only tweak technical bits of the Volcker Rule to ease bank business interactions with hedge funds and private equity. What’s wrong with that? After all, the 3 percent limit on direct ownership of these funds remains in place, ostensibly keeping banks from running amok and reviving the risky proprietary trading businesses that the rule, part of the Dodd Frank reforms passed in response to the Global Financial Crisis, effectively quashed. Banks and regulators portray the measure, out for public comment until April 1, as an exercise in fine tuning, rather than a strategic change.

That might be the case. But the rule change, along with other mods to compliance regulations related to prop trading made last summer, reflect how financial regulation is subject to its own version of the second law of thermodynamics. The regulatory trend is always toward entropy. And this is troubling.

Many at the time of its passage thought the Volcker Rule was downright draconian, separating banks from one of their core revenue-generating businesses. Hotshot traders left investment banks in droves in order to set up their own hedge funds, only to step into a decade-long performance abyss for active managers, where buying a dirt-cheap index-tracking ETF was almost always a better bet than paying 2 and 20 to some guy in red suspenders who never beat the market. The archetypical alpha chaser struggled along like a fat man running after beta’s bus.

That’s still the case. So why worry? Well, to its boosters, myself included, the Volcker Rule seemed like a step toward what the financial system really needed, which was (and is) a new Glass-Steagall Act separating banking and speculative investment businesses. When Sandy Weill convinced Bill Clinton to withdraw the Act in 1999, so the former could stitch together his shambolic Frankenstein’s monster, Citigroup, it was one step on the path toward the Financial Crisis.

During the crisis, the big commercial/investment bank hybrids essentially held their massive retail deposits hostage, forcing the government to bail them out when their “financial engineering” products started blowing up in their faces. The Volcker Rule was meant to keep banks from dabbling in novel, high-risk, nontransparent investment strategies in order to avoid this happening again.

But the banks and investment banks are still joined at the hip. In some cases, even more so. Goldman Sachs is getting into retail. Morgan Stanley is buying E Trade – admittedly, not FDIC-insured, but with over $300 billion in mostly retail assets, something the government is going to be watching closely. And there’s always Citi, with its unerring talent for stepping on every possible land mine.

Even Fitch, which did not exactly cover itself with glory during the run-up to the Financial Crisis, wrote an admirably canary-in-the-coalmine report today saying that the changes were “indicative of loosening regulation and recalibration of post-crisis regulatory rules.” The rating firm “views robust regulation and capital requirements as supportive of credit ratings; therefore relaxation would be viewed as a credit negative.”

It would be more encouraging to see bank regulators laboring to build a more robust wall between taxpayer-insured businesses and the hedge fund and private equity casinos. This mod represents a step – granted, a baby step – in the wrong direction.