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>>> well, years after the financial crisis, little has changed. banks are too big to fail, few executives, if any, have faced justice for nearly collapsing the financial system, or for that matter, the housing market. the rhetoric, however, today suggests that it might change. none of us, of course, have our hopes up at this point. senator carl levin representing the goldman sachs executives who testified before congress be referred to the justice department for potential criminal prosecution. there was a damning 600-page report prepared by senators levin and coburn, it reveals damaging internal communications, which seems to contradict key testimony they made before lawmakers.

>> goldman clearly misled their clients and they misled the congress. the tactics that they used, i thought to believe were disgraceful.

>> louise story is all over the financial crisis and her latest piece focuses on why two years later we haven’t seen handcuffs. louise, welcome back here. what’s the most damning aspect of everything that you’ve recently combed through?

>> well, senator levin has been saying that the s.e.c. has been slow to act. and what we’ve been investigating for the last several months is why have regulators been slow to act? and what we uncovered was, since the financial markets were stirred up in 2008, there were a number of key decisions that were made that held back cases. for instance, we found out about an fbi memo that was then retracted later on. we found out about an s.e.c. policy — let me back, the fbi memo was going to increase funds to mortgage fraud. then we found out an a s.e.c. policy where they would not impose heavy penalties on bailed out banks. these decisions had a bigger impact, because they said to prosecutors within the government, low down, back down, we’re really afraid of knocking over banks in the financial system.

>> you talk about a meeting between tim geithner, who’s now our treasury secretary, and andrew cuomo, who was the attorney general of the state of new york at the time. he, obviously, wanted to be governor of new york. he got there. tim geithner wanted to be the treasury secretary. he got that. did the two of them make a deal to not prosecute the banks?

>> well, tim geithner in 2008 was first and foremost concerned with the stability of the financial markets. and that was very important. but a lot of legal experts say now that by enforcement cases not getting going fast enough back then, that’s why we don’t have cases now. and they did have this very unusual meeting in october of 2008, which we described, it made a big impression on three people they had told about the meeting. and, you know, the idea is that when you want the financial markets to be stabilized, you might not want a hard-charging attorney general throwing out a bunch of subpoenas at that moment.

>> and so, what if the consequences of all these decisions is a massive unemployment crisis, a one in four houses underwater, a multitrillion dollar debasing of the currency to cover it up, resulting in an explosion of global commodity prices, driving to middle east unrest and revolution in all sorts of countries. in the cost / benefit analysis of making it so that the poorest billion can’t eat, putting one in four houses under water and driving 20% of americans out of their jobs, you think it was worth not prosecuting?

>> well, you know, we’ll see if they bring cases, but the thing that we’ve been thinking about over here is that the government and the administration has very much said that their response to the financial crisis was successful because they point at dollars and cents. they point at the bailout money that was returned. and they say because we’re making a profit on that money and we might make a profit on that money, that is success. and what we were pointing to in our article today, is that there are other aspects of how the government would handle a financial crisis to pay attention to. there are moral aspects. and that’s one thing that people are very concerned about across the country. i hear from a lot of readers, the idea that if there was wrongdoing, if there was lawbreaking, we need the government resources going too rooting that out and holding people accountable.

>> one of the very simple things and an awesome way they were making money at goldman and other places, and this is smart and sweet, where you basically assemble a bunch of bonds, payment streams, whether it’s municipal or whatever it is, mortgages or gym memberships, i don’t care, and you basically assemble something that you’re like, there’s no way these people are going to pay their bills. let’s put this into a bond and sell it to some moron and not tell him that we put it together like that, then call aig, bet that it’s going to collapse, we’ll get paid bond all comprehension, and it’s totally legal, and we can tell everybody we’re long the housing market because we’ll by a taste of what we just sold. knowingly selling fraudulent securities, which we have confirmed in the fcic report, 900,000 mortgages dipstick tested, 28% of them confirmed flawed. 11% known to have been sold to investors without disclosure. some of those investors could well be judges, teacher, retirement funds, whatever tim geithner wants for the stability of his own reputation, we suspend fraud investigations on that level to keep tim happy?

>> well, so the thing to watch is if we see more cases coming out. but we look at s&l crisis, the savings and loan crisis from the 1980s to compare it. and one of the things saw is that within the first four years when that crisis started, and we’re four years into this crisis, back then, there were a lot more things that had been done to get the cases going. another thing we saw, back then, bank regulators were required to refer matters to the doj and the fbi. now this time around, we looked at data on referrals, and it doesn’t seem like bank regulators are referring all that many cases. so you kind of scratch your head and say, how are the doj and fbi going to get on to all of these case ifs the bank regulators aren’t referring as many?

>> isn’t that brilliance of defunding and corrupting the bank regulators in the first place?

>> you know, i think we have to stay tuned. we have to keep asking questions.

>> all right.

>> you know, but certainly, we haven’t seen many cases and it seems like the regulators have not been the most aggressive.

>> well, if i was an attorney, they would have accused me of leading the witness and if you were a witness, they would have told you, you did a fine job of not being led, but doing a fine job of sharing with us the information. i appreciate that, louise. thank you very much, louise story. check out her coverage in “the new york times”