Lowenstein dismisses the rabble wanting Wall Street accountability as “armchair prosecutors” with “populist notions,” emblems of the Paranoid Style in American Politics with parallels to the “dismal historiography of JFK assassination buffs to the beliefs that Washington was implicated in Pearl Harbor and Sept. 11,” saying “it’s easier for people to believe that some bad actor is the cause of bad things.”

Well, yes. This wasn’t a natural disaster, but that doesn’t mean evil puppetmasters set out to crash the global economy on purpose.

The problem with letting Wall Street off the hook now is that so much of this stuff hasn’t really even been investigated yet. Just today, news is out that the New York attorney general is opening a broad investigation into Wall Street securitization practices during the bubble, which was four years ago and that a federal audit found that the top five mortgage companies defrauded the federal government.

It isn’t just that prosecutors haven’t gone after the bigwigs of Wall Street, it’s that they haven’t even gone after the smaller fry. If you think about it, it’s pretty surprising that Senate investigators have found so much damning stuff on email. Everybody knows the really naughty stuff isn’t going to be put into writing. That’s why you find so many LDLs in sensitive areas of Goldman’s emails—“let’s discuss live.”

How do you build a case against the higher-ups then? The tried and true method is to target the proles who committed more-obvious crimes, flip them, and work your way up the chain. None of that has been attempted (as far as we know) with Wall Street for its role in the crisis. Contrast that with the full-court press done to protect other investors in the Galleon and SAC Capital investigations, which have been filled with wiretaps, flips, and convictions.

So what are some of the “big risks” that do deserve criminal investigation? Here are a few off the top of my head:

— Reducing “the number of souring loans they returned to the originator in exchange for the right to buy some of the originator’s next batch of loans.”

That’s what the New Century bankruptcy trustee’s report says Wall Street did while denying putback claims by securities investors.

— “Peddl(ing) these mortgages with a willful disregard, bordering on fraud, for whether their customers could repay them.”

Lowenstein himself wrote that in The End of Wall Street. If even he thinks that the Street’s mortgage practices—which were clearly a major cause of the crash—were “bordering on fraud,” then why the carping about people calling for criminal investigations of and charges for things like Wall Street’s mortgage practices?

— Lying about how much debt you have.

Here’s Lowenstein in BW on Lehman Brothers’ Repo 105 scheme (emphasis mine):

Although Repo 105 enabled Lehman to mask $50 billion of debt, the firm’s reported debt was more than $600 billion. Put differently, Lehman’s net leverage ratio was either 15 times or 17 times, both sky-high. Either way, the world knew it was highly leveraged, and its solvency was a matter of intense public debate. Had Lehman presented its balance sheet with more candor, it conceivably would have suffered its crisis earlier; maybe it would have failed in July instead of September. Regardless, the cause of the failure wasn’t Lehman’s misguided attempt to beautify its books. It was its excessive appetite for debt, and the risk tolerance of its creditors, for years before.

Let’s assume that Repo 105 was the only book-cooking Lehman was doing (it almost surely wasn’t), and that at best it staved off Lehman’s bankruptcy by just two months.

The financial crisis—or at least the scale of it— was due in no small part to investor distrust of the books at banks like Lehman Brothers. Nobody outside Lehman and its auditor Ernst & Young specifically knew about Repo 105 in September 2008, but lots of people, like David Einhorn, knew or suspected that Lehman was cooking its books; that the numbers just didn’t add up.

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.