Lanny Breuer and The Untouchables

They also certainly knew that the government would step in to bail them out if a collapse became imminent (See the SNL crisis: the investments were insured by the government, which encouraged the SNLs to take stupid risks with the money). Not sure. Falsifying records is fraud at any level, but if no one is looking over your shoulder, there's no need to do it. People are greedy and short-sighted, even if they are rich bankers, so IMO what is needed is smart regulations that protect people against their own greed/stupidity. Requiring mortgage companies to do a better job with their due diligence, and providing government oversight, for example. Violations of procedures like that wouldn't be as sexy as fraud, but could still result in people losing licenses, for example. But there's a problem with that: the government was encouraging the 'give anyone who wants one a loan' attitude too.

... As for the "too big to fail" scenario that set the stage for both the expectation, in part, of getting bailed out, and the actual bailouts ... has that changed significantly?

My understanding is that JPMorgan, Goldman Sachs, Citigroup, and Bank of America (et al. ?) are still effectively insured (by taxpayer money) against failure (due to, eg., risky practices).

Is it that it's beneficial to have a certain number of institutions that are too big to fail?

Apparently, though, on Wall Street that common wisdom about home prices is not held by all, or even many. In the past six months or so, a number of investment firms, hedge funds, private equity partnerships and real estate investors have turned into voracious buyers of single-family homes. And not just any homes, but foreclosures. Investment banks, who also want in on the action, are lining up financing options to keep the purchases going.

Former Goldman Sachs Group Inc. (GS.N) executive Donald Mullen, one of the architects of the subprime mortgage trade, is trying to raise at least $500 million for a fund that will buy foreclosed homes with an eye toward renting them out.

In the meantime there is money to be made from this

Related Money Laundering
If this news story does not prove that banks are effectively above the law, I don’t know what does. The Guardian, in an account yet to be picked up anywhere in the US media (per Google News as of this posting, hat tip readers May S and Swedish Lex) reports that Wachovia was at the heart of one of the world’s biggest money laundering operations, moving $378.4 billion into dollar-based accounts from Mexican casas de cambio, which are currency exchange firms. While these transfers took place over a period of years, the article notes that it equals 1/3 of Mexican GDP. And the resolution?

Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year’s “deferred prosecution” has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.