I’m a bit surprised that Ted Kaufman, whose eloquent speech on FinReg said exactly what needed to be said about that legislation, was so pleased with the SEC settlement with Goldman Sachs for $550 million dollars. He says that the case proves that the SEC is back on the beat, that Goldman only made $15 million on the deal so the return was not worth the risk for them and that this could signal the beginning and not the end of civil and criminal prosecutions for financial fraud, a new era of accountability and justice.

As I said on the Senate floor on March 15, it is high time that we return the rule of law to Wall Street, which has been seriously eroded by the deregulatory mindset that captured our regulatory agencies over the past 30 years. We became enamored of the view that self-regulation was adequate, that rational self-interest would motivate counterparties to undertake stronger and better forms of due diligence than any regulator could perform, and that market fundamentalism would lead to the best outcomes for the most people.

Transparency and vigorous oversight by outside accountants were supposed to keep our financial system credible and sound. Instead, an era with no effective regulation or law enforcement led to the biggest financial crisis since 1929 and an economic disaster for the American people. And we know that fraud and lawlessness were at the heart of it.

Congress must continue to concentrate law enforcement and regulatory resources on restoring the rule of law to Wall Street. I am proud that the S.E.C. has begun this task. We must treat financial crimes with the same gravity as other crimes, because the price of inaction and a failure to deter future misconduct is simply a price America can never again afford to pay.

Wall Street doesn’t really see it that way, as evidenced by the persistent rise in Goldman’s stock price since the settlement. And the continued use of exotic financial instruments and high-frequency trading and all of the other casino games that have virtually nothing to do with the purpose of finance.

Consider just one mind-blowing example: Wachovia’s financing of Mexican drug money, an extremely lucrative enterprise that netted them billions over the years. The story, worth reading in full, details how drug money gets laundered through US banks, allowing the multi-billion dollar drug cartels to operate freely. Nobody knows how much Wachovia, since bought by Wells Fargo, made on the handling of $378.4 billion dollars in Mexican currency swaps, but the fine the parent company wound up paying under the Bank Secrecy Act was a mere $160 million. And there’s more:

The 1970 Bank Secrecy Act requires banks to report all cash transactions above $10,000 to regulators and to tell the government about other suspected money-laundering activity. Big banks employ hundreds of investigators and spend millions of dollars on software programs to scour accounts.

No big U.S. bank — Wells Fargo included — has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.

Matt Taibbi made this point recently (I forget which radio show it was). If petty thieves steal $10,000 and get caught, they go to jail. If banks steal or fraudulently acquire billions upon billions of dollars, they pay a fine and promise to never do it again, and that’s it. And this was the exact nature of the settlement in the Goldman case.

Rule of law means that people responsible for crimes lose their liberty. That’s what it means for most people, anyway. Not so on Wall Street. Kaufman name-checks Galbraith, but Galbraith would like to see people who break the law go to prison. That would be an effective deterrent, not a slap on the wrist.

UPDATE: It should also be noted that the SEC is “back on the beat” only by the skin of its teeth. The two Republican commissioners on the SEC didn’t want to bring the Goldman case at all, and then split on the settlement as well, trying to get the fine lowered.

Welcome to the return of the Roundup! Other pressing commitments kept me from it the past couple days.

A programming note: I will be attending the Netroots Nation convention next week in Las Vegas, featuring Nancy Pelosi, Harry Reid, Alan Grayson, Al Franken, Van Jones and a cast of hundreds more. I’m headed out Wednesday and will be there through Sunday. Netroots Nation blogging should be light but substantial! I hope to get you a lot of exclusive content from the conference. Also, I’m on a panel about the forgotten foreclosure crisis, with Sen. Jeff Merkley and none other than the subject du jour, Elizabeth Warren, so if you’re actually coming to Vegas, check it out on Saturday at 1:45pm. Details here.

OK, links:

• Big takeout from David Cho on all of Tim Geithner’s accrued power in the now-passed FinReg bill. The tinfoil hatter in me wonders if he’d actually like Warren to get the CFPB director job, so Republicans can obstruct confirmation and draw it out, giving him more time as the acting director. Incidentially, you can find a good rundown of FinReg here.

• Republican talk on the deficit may be a joke, but it’s no laughing matter when it comes to Senate Democrats, who cut the President’s budget from its already-frozen levels. (I should say that a lot of the $14 billion cut comes from foreign aid and defense.)

• Why didn’t this get more press today? Jay Bybee admitted to a House panel that interrogators went further than his guidelines on torture. He said that the CIA never asked for approval of some techniques. He said that even the ones he did authorize were used excessively. He basically acknowledged war crimes. I know we’re in the looking-forward-not-backward era, but isn’t this huge news? Is John Durham, who’s leading the mysterious investigation into torture in the Bush era, aware of all this?

• It could take us a decade or more to dig out of the jobs hole.

• Charlie Cook thinks the Democrats could still get some mileage out of blaming Bush. Heck, conservatives are still blaming Carter and Clinton, so why not? The problem is that Obama thinks voters will just remember the Bush era without being told about it. Um, they won’t.

• Marcy wrote about Liz Fowler joining the Administration to oversee the health care law. This is disturbing on so many levels. But the White House is defending the choice.

• Bruce Bartlett looks at a new poll on the welfare state and thinks it has run its course, but a separate poll shows that people want retirement security in wide numbers And if the cat food commission tries to cut into that security they will rise up.

• After destroying the Gulf, BP might get a tax refund on all the compensation claims they pay out.

• The Pentagon finally sent that innocent prisoner back home to Yemen. A few days old, but important.

• Tea party leaders sure look racist to me.

• Senate Democrats will still bring the DISCLOSE Act to the floor during the July work period, they say. Um, only three weeks left on that…

• Of course Medicare fraud in Florida is “off the charts”, their top gubernatorial candidate on the Republican side paid the highest fine for Medicare fraud in history! It should be re-nicknamed “the Medicare Fraud State.”

• Joe Main of the Mine Safety and Health Association strongly backs the mine safety bill. Worker safety is one of those 80-20 issues where Democrats could really do to force Republicans into a tough vote. Why wouldn’t they, especially in light of Boehner’s “no more regulations” comments?

• Alan Grayson picks up the cat food commission terminology, runs with it.

• Serial plagiarizer Scott McInnis may be still in the Colorado governor’s race, but his party seems to be abandoning him. Meanwhile, the nonprofit he worked for when he plagiarized most of his work wants their money back.

• Now Darrell Issa admits that Sestak-gate was nothing out of the ordinary. Meanwhile, Sestak is so stung by the unbelievable crime of turning down the Administration when they tried to get him out of a Senate race, that he’s way way behind, by zero points, in the race.

• Sharron Angle’s all upset because Meet the Press won’t let her ask for money if she comes on their show.

• The LGBT/immigration rights coalition is a very interesting trend, and very encouraging.

• LieberDem Katrina Swett’s views on gay rights in a state where gay marriage is legal will hopefully come back to haunt her in the Democratic primary. Go Ann McLane Kuster.

• According to Reuters, that Iranian scientist who just showed up in Washington last week and flew home was a longtime CIA asset.

• Minnesota’s greatest activist strikes again.

• Never let it be said that the work of ordinary Americans doesn’t matter.

New West Virginia Senator Carte Goodwin opposes any cap and trade legislation before the Senate, CQ reports. It’s behind a paywall, but here’s a brief piece:

Carte Goodwin, the former general counsel to Gov. Joe Manchin III, gave his position in response to a question at the news conference in Charleston, W. Va., announcing his appointment to the seat previously held by the late Sen. Robert C. Byrd (House, 1953-59; Senate, 1959-2010), who died June 28.

“With regard to cap and trade, I will say this: from what I’ve seen of the Waxman-Markey bill that passed the House of Representatives and other proposals pending in the Senate, they simply are not right for West Virginia,” Goodwin said, referring to a bill (HR 2454) by Henry A. Waxman, D-Calif., and Edward J. Markey, D-Mass., that the House passed June 26, 2009 to cap carbon emissions and create a market where polluters can buy and sell emissions credits and allowances. “I will not support any piece of legislation that threatens any West Virginia job, any West Virginia family or jeopardizes the long-term economic security of this state.”

Goodwin will support an extension of unemployment benefits, according to his colleague Jay Rockefeller at the same news conference. That means that the extension will become law on Tuesday, after an agonizing couple of months.

As for cap and trade, I think you can finally put a stake through its heart. Goodwin becomes the second Democratic Senator today to reject the carbon cap, even if it’s a utility-only piece (in fact, a coal-state Senator like Goodwin would like that even less).

Goodwin said he could support an energy-only bill, and that he supported a bill to basically give a bunch of taxpayer money to the coal industry to develop carbon capture and “clean coal” technology.

Again, water is wet.

Incidentally, this is also an indication of how Joe Manchin would vote. He’s the odds-on favorite to replace Goodwin in the Senate after a 2010 special election.