The political forces who brought deregulation to the financial markets beginning, roughly, in the Reagan and Clinton years missed one vital step. They neglected to treat fraud -- the intellectual equivalent of gratuitous violence (Thank you, Ms. Rand.) -- as a serious crime.
(Those political forces profited beyond the dreams of greed from the bubble and the collapse, but that is another essay.)
Goldman Sachs and a hundred other big-time bankers and brokers and insurance giants were selling products neither they nor their customers understood. That was no particular sin in itself. All the CDO , CMO, Debt Swap, et al. peddlers had to do to square themselves with the law and with morality was to announce in large type: "We think these things might make you some money, just like the Bulgarian Lottery or American Powerball, but since we don't quite know what we're selling, you might want to fly to Vegas instead."
The same principle should have governed mortgage brokers -- from the guy in the Trailer Court who printed up some business card to the high rollers like Country Wide and maybe Ditech. All they needed to clear the fraud hurdle was a prominent announcement every time their spokesasses hit the teevee tube: "But really, folks, if you need guys like us, you can't afford the damn house anyway. And you really, really can't afford whatever the Hell you want to buy with the ruinous second mortgage we'll be pleased to write for you."
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The charges say G-S was blatantly venal in putting together some oddball financial products which could be hawked as investments likely to go up but which were, in fact, designed to go down so a G-S client could profit from a side bet with an insurance company.
Because the bursting of the bubble affected me -- and everyone else who counts on a a respectable interest on carefully saved money -- rather substantially, I've paid attention to the players, their shoddy products, and their criminal sales methods. It leaves the hope that the SEC suit will strip the guilty naked -- and that the the Department of Justice is preparing enough criminal charges to keep the money thugs in poverty and misery and uncertainty for the rest of their miserable, thieving lives.
I suppose a libertarian ought to note in passing that the actions against G-S did not require any or all of His Obamaness's proposed new anti-Wall Street laws, and they never will . All it takes is the will to enforce fraud laws already on the book in one form or another since, oh, about 1787 , assuming you don't care to wander backwards through he various legal codes until you get to the one HRH Hammurabi liked.
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