Arkansas' Senator Blanche Lincoln earned the enmity of liberals across the country during the health-care debate, thanks to her opposition to a public option and her vote against reconciliation—the procedural maneuver that ensured the legislation's final passage. Now, she's poised to test the left's patience again, as she prepares to tackle financial reform from her post as chair of the Senate Agriculture Committee.

The key issue to watch: reforms aimed at derivatives, the shadowy financial products dubbed "financial weapons of mass destruction" by Warren Buffett that were a key component of the global meltdown. Credit default swaps, a type of derivative, were the instruments that allowed AIG to hold the financial system hostage by threatening to default on its obligations and were the immediate cause for the costliest bailout of the crisis. Because of derivatives' roots in food commodities, they still are overseen by the Senate Agriculture Committee. A failure by Congress to rein them in, experts warn, risks another meltdown—and the need for further bailouts.

"As a member of the Agriculture Committee, Senator Lincoln had jurisdiction over derivatives for years but clearly did not do nearly enough to provide appropriate oversight," Halter says.

The complexity of the issue makes legislation extremely vulnerable to under-the-radar mischief as banks and large companies blanket the Hill with cash. Progressive groups are only now beginning to make noise on the issue, having been preoccupied with health care for the last year; major protests are planned for this month on Wall Street and the AFL-CIO is about to launch a new Web site dedicated to financial reform. They're arriving a little late to the party; Congress is aiming to produce final legislation by late May.

"We believe the fight on this is going to be the biggest fight—and the least engaged," said Heather Booth, executive director of Americans for Financial Reform, a coalition of dozens of national and state organizations backing aggressive legislation to rein in banks.

Regarding Lincoln and her Republican counterpart on the Agriculture Committee, Georgia's Senator Saxby Chambliss, Booth said her group was "very concerned about what they are going to come up with."

According to Heather Slavkin, a policy adviser at the AFL-CIO, labor is also keeping a cautious eye on the committee as it tackles derivatives reform.

"This is an area that's hard to understand, but alot of people who research and write on financial systems say this is really the key issue that will determine whether or not a systemic crisis could happen again," Slavkin said.

Under the bill by Senator Chris Dodd (D-CT) that lands in Lincoln's committee this week, all derivatives would have to be sold on an open exchange and the participants in the deals would have to back them up with cash up front in order to prove they won't be wiped out if things go awry. The Obama administration and its allies consider Dodd's bill to be a model for reform as it covers virtually the entire $592 trillion (yes, with a "t") market for unregulated over-the-counter derivatives.

But Lincoln has said she favors exemptions for certain " end users," a term for consumers who don't represent financial institutions. Many of these companies use derivatives to protect themselves against risk rather than buy them as speculative investments, the type that was so damaging in 2008, and a number of these companies are pushing to change the bill so that they won't be required to put up the assets to clear their derivative purchases.

The White House and some outside experts worry that even seemingly insignificant exemptions could provide room for dangerous exploitation by larger companies. Recently Representative Collin Peterson, the chair of the House Agricultural Committee, called for changes to his already-passed bill after discovering that he had unintentionally opened the door to unregulated trading by major financial players.

"The basic story is that if you exempt end users you have created a loophole large enough to drive a truck through," Dean Baker, co-director of the Center for Economic and Policy Research, said. Take for example, Enron, an end-user that was not a financial institution but ended up costing investors billions of dollars after peddling energy-based derivatives that became worthless when it went under.

"The danger in the future is that we don't know who the next AIG could be," said Robert Litan, a senior fellow at the Brookings Institute. "If a company falls on hard times and can't honor its derivatives contracts, and hasn't posted margins, then the argument will be made when it goes down the tubes that all these people with contracts will lose money and we can't allow that, so it we'll have to bail them out."

Lincoln's Democratic primary opponent, Bill Halter, is already seizing on financial reform as a potential angle of attack, which could put pressure on the incumbent senator not to stray too far from the administration line.

"As a member of the Agriculture Committee, Senator Lincoln had jurisdiction over derivatives for years but clearly did not do nearly enough to provide appropriate oversight," Halter said in an emailed statement. "I support the strongest possible financial reform bringing more accountability to our financial markets so that another financial meltdown doesn't happen. The reforms in Senator Dodd's bill should be seen as a floor, not a ceiling."

In an emailed statement, Lincoln spokeswoman Katie Laning Niebaum, emphasized that legislation from the senator's committee is still expected to require that all derivatives at least be traded publicly on exchanges.

"In only her sixth month as chairman of the Senate Agriculture Committee, Senator Lincoln is on the brink of producing legislation that for the first time will require 100 percent transparency and oversight of the unregulated, $600 trillion over-the-counter derivatives market," Niebaum said. "Once her legislation is signed into law by the president, traders on Wall Street and around the world will no longer be able to bet on sectors of our economy outside the scrutiny of U.S. regulators."

Halter has put up impressive fundraising numbers since announcing his run last month, gathering over $2 million in donations since he launched his campaign on March 1, about double Lincoln's total for the past three months. A recent poll by Research 2000 found him down 44% to 31% against Lincoln for the May 18 primary. As organizations that have targeted Lincoln in the past, like the Progressive Change Campaign Committee, shift their focus from health care to finance reform, the senator could see hard-hitting ads on the subject from outside groups as well.

Editor's Note: An earlier version of this article misidentified Dean Baker's occupation and Lincoln's home state.

Benjamin Sarlin is Washington correspondent for The Daily Beast. He previously covered New York City politics for The New York Sun and has worked for talkingpointsmemo.com.