And there's another, more pertinent reason: The top federal law-enforcement establishment is simply not in the mood. People who expect President Obama's Department of Justice to take the lead will be severely disappointed — not necessarily because the task is difficult, but because the Obama administration is showing that it lacks the will.

Instead the new administration is putting its energy into creating what it believes will be a meltdown-proof new system of elite "too-big-to-fail" banks regulated by a beefed-up Federal Reserve.

Even the business establishment's Wall Street Journal used the word "oligopoly" when it noted this past summer that the Obama administration, "after saving the banks, is now planning regulatory changes that could establish an elite group of U.S. institutions with large investment-banking activities" that will be "hard to join and compete against."

Obama's point man: Attorney General Eric Holder.
Chip Somodevilla/POOL-CNP-PHOTOlink
Obama's point man: Attorney General Eric Holder.
Financial criminologist Bill Black warns that the "zombie" megabanks aren't done feeding.
Financial criminologist Bill Black warns that the "zombie" megabanks aren't done feeding.

Bill Black calls that elite group of megabanks, like Citigroup and Bank of America, "zombies." And they're not done feeding. All of the devilish tools remain in place, says Black, including "the subprime loans, with securitization and the credit default swaps. And the Obama administration, astonishingly, wants to re-create a secondary market in subprime loans — even though it cost us more than a trillion dollars."

It may seem that some sort of über-regulator is needed. But Camden Fine, a small-town banker who now leads a trade group of 5,000 community banks, sees a pumped-up, unified regulatory agency as "a big, hairy cyclopean beast" that would protect the megabanks no matter how reckless they are and continue to favor Wall Street over Main Street. Compared with the Obama administration, America's small-town bankers look like populists.

An administration whose claws are far from sharpened shouldn't really surprise us: Obama was Wall Street's preferred candidate in terms of campaign contributions. His SEC chair, Mary Schapiro, ran FINRA, the Street's self-regulatory private agency. Gary Gensler, chair of the Commodity Futures Trading Commission, actually worked a decade ago to exempt credit default swaps and other derivatives from regulation.

More important, the nation's new top prosecutor, Attorney General Eric Holder, has a history of preferring that deviant corporations be held to no more than a "voluntary cooperation" system in which they investigate themselves privately.

Under the "Holder Memo," which he wrote in 1999 as deputy AG in the Clinton administration, bad-boy executives and their corporations who turn over evidence to the government qualify for lenient sentences and fines and, sometimes, for settlements without even indictments. The consequences of their crimes often amount to only the cost of doing business.

After leaving government Holder followed the mandates of his own memo and made a lucrative living by conducting internal probes for companies and negotiating outstanding results for white-collar clients. He was public about it: Holder's 2002 op-ed "Don't Indict WorldCom" in the Wall Street Journal argued on behalf of the corporate perpetrator of one of the sleaziest frauds of the past decade.

Holder takes a hard line on social issues but not on financial issues: He favors rededicating the DOJ to civil rights, and he has vowed to investigate Bush-era torture. But when asked if he plans to prosecute the financial mayhem that erupted under Bush, Holder has said that he isn't inclined to engage in what he calls "witch hunts."

The previous chief of the DOJ's Criminal Division, Rita Glavin, seemed motivated: She testified to Congress last spring, before she was replaced, about the need to hire numerous FBI agents to fight white-collar crime. After 9/11 hundreds of FBI agents had been shifted from financial fraud to counterterrorism, so the agency was perilously thin when the tidal wave of financial fraud inundated the system.

Glavin's successor couldn't be further from the right person to root out white-collar crime. Last spring Holder tapped Lanny Breuer, his former partner at the major Washington, D.C. firm Covington & Burling, to head the DOJ's Criminal Division. In 2008 Breuer represented Roger Clemens at Senate hearings when the big right-hander denied under oath using steroids or human growth hormones. If Clemens gets indicted for perjury, the next question would be whether Breuer suborned him.

More to the point of high-level white-collar crime, in 2006 Breuer represented Mario Gabelli, a billionaire broker and money manager who, in some recent years, has been the highest-paid person on Wall Street, with compensation in former Merrill Lynch CEO John Thain's class. When Gabelli got in hot water for setting up straw entities to bid at federal auctions of coveted cell-phone licenses, Breuer savaged the person who blew the whistle on the scheme and kept his client out of criminal court. "Super Mario" eventually paid a $130 million settlement under the federal False Claims Act, but he made more than $200 million from the scam, so the litigation amounted to the cost of doing profitable business.

As chief of Covington's white-collar department, Breuer was known for his "rogues' gallery" of corporations and individuals under investigation or indictment. His clients included Halliburton, the Federal Home Loan Mortgage Corporation (Freddie Mac), Exxon Mobil and big pharmaceutical companies. He also represented Canadian mogul Eugene Melnyk, who was charged with accounting fraud by the SEC, and the lieutenant governor of American Samoa, who was indicted for bribery and bid rigging. Breuer represented so many companies that had problems with the federal government that the Department of Justice promised to erect "Chinese walls" around him to keep him from traipsing into his former clients' matters. The napping Senate confirmed him, 88-0.

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