This whole situation reads like some 1920s gangster novel except for one thing.  In this case the bad guys win and get the whole city to themselves. I just got through reading this piece by Danny Schechter on the AlJazerra web site. He references the Matt Taibbi article in The Rolling Stone, "Why Isn't Wall Street in Jail?".  Both are excellent examinations on the whole Wall Street debacle and how corrupt and involved Washington is in it. Danny Schechter goes into a bit more detail as to why nothing - I repeat nothing will be done about it, probably ever.  He lists ten problems.

First, many of those who might be charged with financial crimes and fraud invested in lobbying and political donations to insure that tough regulations and enforcement were neutered before the housing bubble they promoted took off.

After hundreds of bankers were jailed in the wake of the Savings and Loan crisis, financial fraudsters pushed for weakened regulations, guaranteeing that their colleagues wouldn't be jailed in when the next crisis hit. 

In effect, their deregulation strategy also deliberately "decriminalised" the environment to make sure that practices that led to high profits and low accountability would be permissible and permitted. What was once illegal soon became "legal".

No enforcement

The cops and watchdogs were taken off the beat. Anticipating and then dissolving restraints, they engineered a low-risk crime scene in the way the Pentagon systematically prepares its battlefields. This permitted illicit practices, to be encouraged by CEOs in a variety of control frauds to keep profits up so that the executives could extract more revenue.

So get rid of the cops and pay off who ever is left.

Second, the industry invented, advertised and rationalised exotic financial instruments as forward looking "innovation" and "modernisation" to disguise their intent while enhancing their field to maneuver.

This was part of creating a shadow banking system operating below the radar of effective monitoring and regulation. Where is the focus on controlling the out of control power of the leverage-hungry gamblers at unregulated hedge funds?

Make whatever is being done so obscure that nobody can understand it. In short do a real good job of hiding the still.

Third, the industry promulgated economic theories and ideologies that won the backing of the economics profession which largely did not see the crisis coming, making those who favored a crackdown on fraud appear unfashionable and out of date.

As economist James Galbraith testified to Congress: "…the study of financial fraud received little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students. Economists have soft-pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now."

Make sure those in charge wouldn't know a bottle of booze if they were hit over the head with it.

Fourth, prominent members of the financial services industry were appointed to top positions in the government agencies that should have cracked down on financial crime, but instead looked the other way. The foxes were indeed guarding the chicken coop guiding institutions that tolerated if not enabled an environment of criminality.

Alan Greenspan and Ben Bernanke were repeatedly warned by underlings at the Federal Reserve Bank about pervasive predatory practices in the mortgage and Subprime markets and they chose to do nothing. Now Greenspan acknowledges pervasive fraud but decries the lack of enforcement while Bernanke wants to run a Consumer Protection Agency after ignoring consumer complaints for years. Even as the FBI denounced "an epidemic of mortgage fraud" in 2004, their white-collar crime units were downsized.

Make members of the gang part of the police force.

Sixth, politicians and corporate lawyers fashioned settlements of abuses that were exposed rather than prosecutions. The government benefited by getting large fines while businessmen avoided jail. 

Financial executives were often rewarded with bonuses and huge compensation for practices that skirted or crossed the line of criminality.

Make sure the correct palms get sufficiently greased.

Make sure the status quot is maintained.

Eighth, even as the economy globalises, and US financial firms spread their footprint worldwide, there was little internationalisation of financial rules and regulations. 

Keep everybody else in the dark and keep outsiders from causing any trouble.

Ninth, With the exception of softball inquiries by a financial crisis inquiry commission, there has been no intensive investigations in the United States even like the tepid 9/11 Commission.

Make it look like the government is doing something when it isn't.

Finally, tenth, a big problem in my countdown, are the progressive critics of the crisis who also largely ignore criminality as a key factor and possible focus for an organizing effort.

Though I have no real proof I am sure most in Congress and probably a few of the presidents knew what was happening to the economy. At least as far back as Reagan. maybe even further. But nobody dared say anything. If you remember correctly there was first this period where companies were buy out and taking over other companies like some fire sale in an Irish pub. Combined with the S&L failures and the deregulation of the Financial industry, our economy has been going from bubble to bubble to bubble with little real economic growth underneath. But nobody wanted to be in charge when the whole house of cards finally came crashing down.  So each time they made damn sure the mess got passed on to somebody else, while taking in as much as they could get. Then in 2005 when the situation started to really look bad, with the housing bubble about to burst, people started to abandon ship. If you remember correctly there was a period when nearly every week saw some old guard GOP Senator of Congressman decide to retire. These were not people who had any scandals or were at risk of being challenged and loosing an election. Most would have been shoe ins and could have died in office. But they left in droves.   Just before the shit hit the fan.

So now we have a congress and an administration who is continuing this charade, reshuffling the marked deck and hoping nobody will notice that the economy is continuing down the drain and that Wall Street does not get hurt when the final flush happens.