In all these cases, prosecutors and the SEC will likely be scrutinizing the executives’ stock sales as the crisis played out, looking for both insider trading and evidence of the executives’ true state of mind…

The same myopia affects the magazine’s view of Wall Street behavior.

Here’s Fortune’s treatment of Bear:

Plaintiffs class-action lawyers claim that Bear’s problems should not end there [with already indicted Bear hedge-fund managers.] Two months after the hedge funds collapsed, CEO James E. Cayne assured investors that “the balance sheet, capital base, and liquidity profile have never been stronger. Bear Stearns’ risk exposures to high-profile sectors are moderate and well controlled.” Seven months later the company sought emergency funding from the Federal Reserve and was quickly sold to J.P. Morgan Chase (JPM, Fortune 500).

Of course, as the world has seen, a lot can change in seven months, so it will be hard to prove that Cayne did not believe what he was saying. A tougher case is presented by his successor, Alan Schwartz, who was saying much the same thing as late as the morning of March 12, 2008, just 36 hours before seeking emergency funding. “Our liquidity and balance sheet are strong,” Schwartz told CNBC’s David Faber. “We don’t see any pressure on our liquidity, let alone a liquidity crisis.”

Although federal prosecutors in Brooklyn were asking some questions immediately after the company’s collapse, there does not appear to be any active criminal inquiry. Counsel for Schwartz declined to comment, as did U.S. Attorney Campbell.

What this and other Wall Street examples leave out is the sale, by Bear and others, of billions of dollars of defective securities, and the extent to which sellers knew they were defective. Fortune tosses off this entire category of behavior as “a bad business model.”

To begin with, bad business models - even business models that in retrospect look like prescriptions for disaster - are not crimes as long as they are fully disclosed to investors. And the fact that lenders were hawking outlandishly risky mortgages to people who were terrible credit risks was, in fact, no secret in America: It was bipartisan national policy. The fact that exotic mortgages (like “pick a payment option” AR Ms and “Alt-A” loans with no documentation of the buyer’s assets or income) were then being packaged into complex derivative securities - some rated AAA by Moody’s, S &P, and Fitch - was not just well known but also hailed as ingenious by some of the putatively best financial minds in the country.

Actually, this passage is deeply unfair to the professionals who maintained their integrity and refused to sell exploding products. Everybody wasn’t doing it. And to the extent that journalism such as this discourages public clamor for investigation of who knew what when in the investment banks, it’s a disservice.

The Fortune story was too much for Janet Tavakoli, a financial industry consultant and author who warned of presciently potential problems in financial firms. In an email to CJR that inspired this post, she doesn’t buy the argument even that executives will get off for misstating their firm’s financial position:

The premise of this week’s Fortune cover story… is not only incorrect, it lacks Common Sense. The article seems unable to muster outrage. In the words of Thomas Paine: “a long habit of not thinking a thing WRONG, gives it a superficial appearance of being RIGHT.” Fortune talks about the difficulty of proving criminal intent when the SEC, Fed chairman and others thought (or more to the point, studiously avoided rational thought) things had gotten as bad as they could get. Since when are the popular delusions of those outside one’s firm a defense for willfully failing to mark your positions to market and material accounting weaknesses if not misstatements?

Fortune also gives the benefit of the doubt to senior managers who were way off the mark in their earnings releases and says “we’re not talking here about …Ponzi schemes.” In a few cases, the latter is actually true, but in others, we should be talking about Ponzi schemes and asking why the SEC did not shut down the securitization groups at some of the major investment banks doing business in the United States.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.