Last week, William Black, a former investigator of the Savings and Loan scandal, went on Bill Moyers Journal and repeated a charge which a growing number of experts agree with: the chief executives of many of America’s largest banks knowingly engaged in the fraud which has now brought the economy to the brink of catastrophe.

Black is a former Director of the Institute for Fraud Prevention who now teaches Economics and Law at the University of Missouri, Kansas City. Moyers recalled that it was Black who accused then-House Speaker Jim Wright and five U.S. Senators, including John Glenn and John McCain, of doing favors for the S&Ls in exchange for contributions and other perks. “The senators got off with a slap on the wrist,” said Moyers, “but so enraged was one of those bankers, Charles Keating—after whom the senate’s so-called ‘Keating Five’ were named—he sent a memo that read, in part, ‘get Black—kill him dead.’ Metaphorically, of course.”

Here are some of the most important observations Black made to Moyers about the current crisis:

* The CEOs of major banks and mortgage companies knowingly made billions of dollars of bad loans, to make huge short term profits for their institutions and themselves

* These were known among financial execs as “NINJA” loans—no income verification, no job verification, no asset verification.

* One company, IndyMac, produced as many losses as the entire S&L debacle. In 2006, IndyMac sold $80 billion of these essentially worthless loans to other companies.

* “The exotic stuff was created out of things like liars’ loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings…A triple-A rating is supposed to mean there is zero credit risk. So you take something that…has crushing risk. That’s why it’s toxic. And you create this fiction that it has zero risk.”

* As a result, much of the American financial system “became a Ponzi scheme: Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, ‘Triple-A.’”

* Treasury Secretary William Geithner is continuing the cover-up started by his predecessor, Henry Paulson: “Geithner is publicly saying that it’s going to take $2 trillion to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses—and that they’re fine.”

* After 9/11, the Justice Department transferred 500 white-collar specialists in the FBI to International Terrorism—and the Bush administration never replaced those agents. “This crisis is [at least] 100 times worse than the S&L crisis [and] there are one-fifth as many FBI agents as worked the Savings and Loan crisis.”

* The Prompt Corrective Action Law, passed in the wake of the S& L crisis, requires the current administration to close insolvent institutions, “and they are refusing to obey it. They ignore it, and nobody calls them on it.

All of which cries out for a repetition of the Pecora investigation into the causes of the Great Depression. Back then, we said, “Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters? Where’s our investigation?”

The bottom line here is that the government’s failure so far to investigate or indict any of the financial titans most responsible for destroying the economy is a much larger scandal that the bonuses being paid by AIG or anybody else.

The one thing Black didn’t mention in his conversation with Moyers was the fact that all fifty state Attorneys General were aware of the massive loan fraud being committed and eager to prosecute it. But as Eliot Spitzer pointed out in The Washington Post last year, the Bush administration used the Office of the Comptroller of the Currency to embark “on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

In almost every scandal like the derivatives meltdown, there is one person who spotted the dangers inherent in a financial extravaganza like this one years before everyone else. In this case, our unsung heroine was a brilliant lawyer named Brooksley Born, who was Bill Clinton’s first chief of the Commodity Futures Trading Commission. As detailed by Rick Schmitt in a startling article published by the Stanford Alumni Magazine, Born fought fiercely to expand her agency’s regulatory powers over the burgeoning derivatives market at the end of the 1990s.

Her efforts were defeated by Alan Greenspan, Arthur Levitt Jr., Robert Rubin, and Larry Summers. The mindset she was up against was best summarized by a conversation Born recalled having with Greenspan:

“Well, Brooksley, I guess you and I will never agree about fraud,” said Greenspan.

“What is there not to agree on?” Born replied.

“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud.”

Greenspan disputed Born’s recollection; the former regulator stands by her story.

Here is one of the key passages from Schmitt’s piece:

“I was told by the Secretary of the Treasury that the CFTC had no jurisdiction, and for that reason and that reason alone, we should not go forward,” Born says. “I told him…that I had never heard anyone assert that we didn’t have statutory jurisdiction…and I would be happy to see the legal analysis he was basing his position on.”

She says she was never supplied one. “They didn’t have one because it was not a legitimate legal position,” she says.

Greenspan followed. “He maintained that merely inquiring about the field would drive important and expanding and creative financial business offshore,” she says. CFTC economists later checked for any signs of that, and came up with no evidence, Born says.

“It seemed totally inexplicable to me,” Born says of the seeming disinterest her counterparts showed in how the markets were operating. “It was as though the other financial regulators were saying, ‘We don’t want to know.’”

She formally launched the proposal on May 7, and within hours, Greenspan, Rubin and Levitt issued a joint statement condemning Born and the CFTC, expressing “grave concern about this action and its possible consequences.” They announced a plan to ask for legislation to stop the CFTC in its tracks.

When Born refused to back down in her efforts to regulate the derivatives market, her opponents got Congress to pass a law preventing her from carrying out what she regarded as her duties. That temporary measure was replaced by the permanent, and much more sweeping, Commodity Futures Modernization Act, which Bill Clinton signed into law at the end of 2000. At the end of the first Clinton administration, Born gave up and resigned from her post.

William Black concluded his interview with Moyers by calling on the Obama administration to appoint people “who have records of success, instead of records of failure.… And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.”

A good place to begin would be the appointment of Brooksley Born to oversee a complete overhaul of the way the financial markets are regulated—so that there might be some small chance that some day, fifty years from now, we won’t repeat every one of these mistakes again.

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Charles Kaiser is the author of The Gay Metropolis and 1968 in America. He has been media editor for Newsweek, a member of the metro staff of The New York Times, and a reporter for The Wall Street Journal, where he covered the press and book publishing. To learn more, visit charleskaiser.com.