In Lashing Goldman, Lawmakers Should Also Turn the Whip on Themselves

Last Updated Apr 27, 2010 11:44 AM EDT

Goldman Sachs's (GS) public flogging on Capitol Hill this morning started predictably with lawmakers tut-tutting about the investment bank's sins.

"Goldman Sachs made billions of dollars from betting against the housing market, and it placed those bets in some cases at the same time it was selling mortgage-related securities to its clients," said Sen. Carl Levin, D-Mich., in a statement. "They have a lot to answer for."

Look, anyone in their right mind knows that Wall Street has earned a whipping and, better yet, a few rules to play by. But does anyone find these repeated outpourings of righteous indignation from Congress increasingly hard to swallow?

By now it's become eminently clear that Goldman skirted ethics, and probably the law, in the years leading up the housing crash. All the big banks did. But let's not forget who let them do it: Washington. Until all hell broke loose in 2007, lawmakers on both sides of the aisle spent the better part of three decades clear-cutting the financial services industry of regulations.

A Republican president, Ronald Reagan, in the 1980s helped turn the "free market" into a cult. A Democratic president, Bill Clinton, in the 1990s' opened Pandora's Box in tearing down longstanding boundaries dividing commercial banks, brokerage firms and insurance companies. As a gargantuan speculative bubble expanded in this decade, lawmakers napped, waking periodically to campaign and cash checks from financial firms.

Now they're awake. That's nice. In the meantime, a parade of Wall Street creatures have appeared before Congress in recent months to issue half-hearted apologies and take their punishment. And so they should. But I wouldn't mind hearing, say, Levin, or Harry Reid, D-Nev., or John Boehner, R-Ohio, or any other of our elected champions of the public good stand up, acknowledge their own role in this affair and state the obvious: They blew it.

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    Alain Sherter covers business and economic affairs for CBSNews.com.