The Financial Times has a very interesting profile of former Bakersfield real estate guy Carl Cole, who’s about to start a long stint in prison for mortgage fraud during the bubble.

That time is well deserved, as the FT shows, but it’s yet another reminder of how the relatively small fry have gotten pinched after the crash, while everyone on Wall Street remains free.

At first, it looks like the paper will get into this critical angle, getting in a great line in the third paragraph about how “banks that cheat people pay fines, but people who cheat banks do time.”

But the FT never really gets there, ultimately letting Wall Street off the hook as if it were a victim of the mortgage-fraud frenzy.

Here’s the critical passage (emphasis mine):

It felt great because Crisp & Cole had become connected to a higher power - Wall Street. The firm sat at the local end of a global supply chain. Its scores of employees were creating hundreds of mortgages a year for banks, which were then packaging the home loans into securities sold to investors around the world - the ultimate source of most of the money used to fund US house purchases, then and now.

The conceit of the bankers involved in this trade was that the mortgages they were buying were a kind of commodity - like the crude coming out of a Bakersfield oil well. But the grist for the mortgage-backed securities mill was paper - and lots of it: income verification statements, appraisals and other documents prepared by human beings at firms such as Crisp & Cole.

This put local real estate people in a position to pull the wool over the eyes of Wall Street. If bankers wanted more mortgages, the folks at Crisp & Cole could make them. If there were no more qualified buyers, they could make them up. Working in lightly regulated corners of the business, these real estate pros knew how to massage information, call the right people and spread enough cash around to get the mortgages approved.

It’s quite a bit more complicated than Wall Street having the wool pulled over its eyes.

To believe that it did, you first have to accept that the Wall Street sharpies the FT normally writes about were unknowingly taken for a ride by a horde of mortgage hustlers from places like Bakersfield. Then you have to disregard the fact that it was in Wall Street’s interest to move paper from any source, without regard to quality. Wall Street was paid not to know. Indeed, Wall Street was particularly interested in funding a product it called “liar loans,” and did so to the tune of hundreds of billions of dollars. This wasn’t about wool being pulled over anyone’ s eyes. It was about looking the other way—or to put in Wall Street terms: IBGYBG.

Which we know from the wealth of evidence that shows Wall Street being told that many or most of the loans it was securitizing and selling didn’t meet declared underwriting standards and/or were fraudulently created.

Sometimes, banks even used this information to demand what were effectively kickbacks from mortgage brokers—going back for discounts on problematic loans and then failing to pass them on to investors, whom it kept in the dark.

As Gretchen Morgenson wrote in 2010, “The bottom line: the more problematic the loans, the better the bargaining power and the higher the profits for Wall Street.”

It’s too bad, because otherwise the FT’s is an excellent and well written piece.

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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. Follow him on Twitter at @ryanchittum.