It should be obvious on its face that the sort of fraud that Goldman Sachs is alleged to have participated in is illegal -- after all, the SEC is in fact, bringing a claim against the financial giant.
But there's a talking point emerging: since it's possible to bring these sorts of charges against Wall Street firms anyway, what's the point in more regulation? On "Meet The Press" this weekend, Representative Marsha Blackburn (R-Tenn.) probably believed she was making a trenchant point when she took pains to note that, "The Goldman charges that have come forward now... have come forward under existing SEC rules." She had just finished decrying government overreach and insisting that the "free market" had "no expiration date," so I'm pretty sure I know the score when it comes to her opinion of regulatory reform.
Nevertheless, one of the whole points of reform is to prevent such fraud from ever happening in the first place. And over at TAPPED, Tim Fernholz goes into detail on how the reform bill "in a number of areas would make the scheme less likely to work and more likely to be detected." The proposed Consumer Financial Protection Bureau would create regulations to make the sorts of bad loans that Goldman played shell games with less likely to default. It would take steps to end the dark market of derivatives and swaps that kept investors in the dark. Finally, regulators will be armed to take a hard look at interactions between financial institutions.
This is just a distillation, of course. I encourage you to read Fernholz's explanation in its entirety.