PBS Frontline has done a good job of reporting on the financial crisis. Their latest, The Untouchables, gives a very clear view of how regulation does not replace fear of failure in the marketplace. The Justice Department showed a prosecutorial cowardice and diffidence to make a case necessary to enforce rules and regulations against those who can afford even stronger defense teams. When there is no money in the bank it's tough to hire a such a team. Citigroup management got plenty of internal warnings that something that could jeopardize the bank's very existence was in effect. Without a bail out Citi would have gone under and justice done. In this case persuasive influence gave the taxpayer the bullet and management title to their ill gotten bonuses.
Thankfully the private sector has civil recourse where the legal teams opposing the banks are more capable than the quintessential government bureaucrat, Lanny Breuer.
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