Despite widespread fraud, and other criminal activities that took place prior to the collapse of the financial system, there have been no criminal charges against the Wall Street bankers who were primarily responsible for the collapse of a system based upon fraud. The Attorney General of New York has filed criminal charges against Bear Stearns under a state law that dates back to the Great Depression when Wall Street banks did not escape so lightly from criminal prosecution.
Bear Stearns, which was acquired by JP Morgan in a fire sale, during the bank bailout season. They are being prosecuting for a failure of due diligence. They purchased loans that that did not conform to their underwriting standards. They packaged these loans into securities which they sold to unsuspecting investors. The securities lost much of their value as the underlying loans went into default. Instead of protecting the investors who purchased the securities, Bear Stearns demanded cash compensation from the loan originators which it kept.
The NY State Attorney General is prosecuting this case on its own. Neither the Federal Justice Department, the SEC or other federal agencies are supporting the prosecution. JP Morgan is fighting the charges. Therefore, the Attorney General's office will collect more information to support its charges against Bear Stearns/JP Morgan. This may pave the way for further prosecutions.