If you read the headline above, I bet you are thinking that this is something about torture, something along the lines of making the point that the few individuals prosecuted for prisoner mistreatment at Abu Ghraib were not the only guilty ones. Well, that point is true, but this about another scandal.

Matt Taibbi, cogent as ever, worries that the entire credit meltdown may be painted as a few bad apples at AIG and other banks. He believes that this is wrong and that there was a systemic failure. What difference does this make? Well, in both the Abu Ghraib and banking scandals, the effort to identify a few rogue individuals, to the exclusion of others, preempts analysis and true reform to minimize the likelihood of the same behavior in the future.

I’ve heard people say, for instance, that much havoc could have been avoidded if there had just been a law mandating margin requirements for CDS contracts, so that people like Cassano couldn’t make bets without the money to pay off.

This is bullshit. And it’s dangerous bullshit. The problem isn’t a few technical glitches in the system that allowed the Cassanos of the world to drive Mack Trucks of leverage through a loophole or two. The problem is, at its roots, a profound collapse of morals on Wall Street that would have found its way to financial destruction using any available set of instruments and laws. We are talking about people who sold giant rafts of bullshit mortgages to pensions, who stuck municipalities, innocent taxpayers, with time-bombs of subprime debt. And not just one trader here and there, but thousands of them, with the sober approval of the highest level executives in the biggest firms. On its most basic level what these people did is rip off huge institutional investors — old people, taxpayers, you and me — by finding ways to game the system and trick the big institutional fund managers into buying what they thought were safe investments, but were actually financial lemons that could barely make it out of the lot.