SEC sues Goldman Sachs for fraud

Finally, our federal government acts to hold Wall Street accountable:

Goldman Sachs, the Wall Street powerhouse, was accused of securities fraud in a civil lawsuit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly intended to fail.

The move was the first time that regulators had taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market.

It's a small step, but a much appreciated one.

For far too long, Wall Street banks have been operating under their own set of rules, scheming, wheeling, and dealing their way to higher profits. Bonuses are handed out like candy, regardless of whether the firm has done well or not. When there's a crisis, executives simply go to Congress and get a blank check so they can cover for their mistakes on the taxpayer's dime.

Meanwhile, our existing regulations are not being enforced. Regulators are too cozy with the folks they're supposed to regulate. That has got to change. We'd like to think today's news is the beginning of that. The New York Times notes:

Goldman vigorously denies any wrongdoing, calling the S.E.C.’s charges “completely unfounded in law and fact.” It will undoubtedly assemble a daunting legal team and mount a vigorous defense. But if the S.E.C. makes its case, it will be a watershed moment, changing the dominant narrative of the financial crisis.

Imagine how much good could be done if the Obama administration used its full investigative and enforcement powers to go after the banks. There's no reason to wait. The case for financial regulatory reform will only be strengthened when the unethical activities that went on before the Great Recession are exposed. More congressional oversight wouldn't be a bad thing, either.