06/29/2010 05:12 am ET Updated May 25, 2011

Now We Should Hold Hearings Into The People Really Responsible For The Financial Crisis

The Senate panel did a good job grinding up Goldman Sachs execs into hamburger meat. And the 10 hours of live TV coverage certainly made for good entertainment.

(Of course, as illustrated by Goldman Sachs's $1 stock increase on a horrible day for the market, "entertainment" was pretty much all it was, but that's another story).

But now it's time to put a few more folks in the hot seat. Namely, the folks who are arguably MOST RESPONSIBLE for the financial crisis that we're still struggling to recover from.

Sure, Wall Street greed played a role. So did giddy house buyers and scummy mortgage brokers. So did Angelo Mozilo and all those bank CEOs. So did Bernie Madoff and Allan Stanford. So did Ben Bernanke and Alan Greenspan, those Fannie and Freddie CEOs, AIG, and the hundreds of banks that have since rolled over and gone belly-up.

But the big message of the aftermath of the crash is this:

Almost everything that happened was perfectly legal (and even encouraged by the government). And most of the rest was completely missed by the folks who were supposed to be watching the action and enforcing the laws.

So it's time to ask WHY all that stuff was legal.

Don't forget: Bear markets for stocks and houses are huge bull markets for the prosecution business. Thus, for the past two years, every prosecutor and regulatory agency on earth has been combing through the wreckage with the aim of filing fraud charges and throwing people in jail.

And what have they found?

Pretty much nada.

Sure, they got Bernie and Allan, but only after their Ponzi schemes collapsed. (In the intervening years, meanwhile, they not only missed these crimes, but actively squelched opportunities to bust them).

But they haven't found anything else.

NO MAJOR PLAYER in the financial crisis has gone to jail. There have been no "Enron Task Forces". The one criminal case connected to the crash, the trial of two Bear Stearns portfolio managers, ended in an acquittal. After 18 months of searching through 20 million Goldman Sachs emails, the best the SEC has been able to come up with is a (weak) civil fraud charge.

So what can we conclude from this?

Prosecutors haven't found wrongdoing because, under the laws in effect at the time, there wasn't any wrongdoing.

And that highlights the REAL crime here: The laws in effect at the time.

So it's time to call a few more people to the stand.

The folks who made the laws that allowed all this stuff to happen, for example. And the folks responsible for the agencies that missed the only criminal behavior that HAS been found. The Senators who approved the lax "mark-to-market" accounting rules (which allowed banks like Lehman to print huge phantom "profits" for bonus and stock purposes, and then, on the way down, lie about the value of their crap assets until they collapsed in a heap). The folks who championed all those neg-am option-ARM mortgages (Alan). The folks who decided Glass-Steagall was an unnecessary anachronism (Bill?). The people who decided derivatives shouldn't be regulated (Alan, Bob). The man who ran the SEC while it whiffed on Madoff and Stanford (Chris). The man who ran the SEC when it decided to eliminate leverage rules, allowing the banks to gamble themselves into oblivion (Chris). The folks who got Fannie and Freddie into the sub-prime business (Daniel, etc.). And so on...

Now that they've had time to reflect, it would actually be instructive to hear these folks reflect on the thinking and pressure that led them to make these (terrible) decisions. This information won't be useful now--the milk has already been spilt--but it might be useful 50 years from now, when the good times are back and we're obsessed with complete deregulation and de-enforcement again.

And it would certainly be entertaining!

Don't miss: 10 Burning Questions The Senators Should Have Asked Goldman Sachs