Sebastian Mallaby of the Washington Post says all this talk about the crisis being caused by deregulated markets failing is dangerous “nonsense.” He’s right that one of the chief causes was the Fed’s easy money policy, but he’s dead wrong in arguing that lax oversight didn’t play a huge part. Here’s one foolish argument:

The key financiers in this game were not the mortgage lenders, the ratings agencies or the investment banks that created those now infamous mortgage securities. In different ways, these players were all peddling financial snake oil, but as Columbia University’s Charles Calomiris observes, there will always be snake-oil salesmen. Rather, the key financiers were the ones who bought the toxic mortgage products. If they hadn’t been willing to buy snake oil, nobody would have been peddling it.

Spoken like a pre-Teddy Roosevelt meatpacking tycoon: “If you buy my rotted meat, it’s your fault! Caveat emptor, and just eat around my employees’ severed fingers.”

Is this guy serious? This is like blaming a car buyer for purchasing a lemon off the lot—one that was built shoddily either with malice or gross negligence.

Need further evidence of wrongdoing by those who created the snake oil? Bank of America agreed to what is by far the biggest predatory-lending settlement ever and will pay out up to $8.4 billion to home borrowers because of Countrywide’s crooked dealings with them. It will provide much-needed relief for homeowners.

The Times had some superb reporting on Fannie and Freddie in Sunday’s paper. It shows that Fannie and Freddie were dragged into the subprime orgy by Mr. Market, rather than the other way around as the Right would have it. The GSE’s lost huge amounts of market share in the early-to-middle part of the decade as Wall Street stepped in to shovel up the crappiest mortgages it could find.

“You’re becoming irrelevant,” Mr. Mozilo told Mr. Mudd, according to two people with knowledge of the meeting who requested anonymity because the talks were confidential. In the previous year, Fannie had already lost 56 percent of its loan-reselling business to Wall Street and other competitors.

“You need us more than we need you,” Mr. Mozilo said, “and if you don’t take these loans, you’ll find you can lose much more.”

Then Mr. Mozilo offered everyone a breath mint.

The accompanying chart shows Fan and Fred’s market share falling off a cliff all of a sudden. I’d like to see graphics showing their market share of the worst mortgage-backed securities, though. That would show in even starker contrast how small a part they played in the worst lending compared to Wall Street.

Oh, and a bonus quote from the big NYT story:

On one occasion, a hedge fund manager telephoned a senior Fannie executive to complain that the company was not taking enough gambles in chasing profits.

“Are you stupid or blind?” the investor roared, according to someone who heard the call, but requested anonymity. “Your job is to make me money!”

The Times and Journal both have long post-mortems of Lehman Brothers. The NYT finds that Lehman wanted to convert into a commercial bank like Goldman Sachs and Morgan Stanley would shortly after its demise, but the Fed wouldn’t let it. It also refused Warren Buffett’s terms for an investment as too “onerous,” surely a wrong move.

The Journal’s article focuses on how Lehman executives misled investors about its problems. For one, it high-balled the value of its real estate holdings by more than a third, according to two Wall Street executives who have seen its books. For another, five days before it filed for bankruptcy, and one day after it determined that it needed to raise billions in capital, executives told investors on a conference call that Lehman was fine and didn’t need new capital.

It will be fascinating to watch how the criminal aspect of the Wall Street crisis unfolds over the next several months. Rest assured, it will and there will be lots of people going to jail. For now, everyone is rightly focused on staving off an utter collapse of the system.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.