The young hotshots from Goldman were careful not to say too much in their testimony before the Senate Governmental Affairs Subcommitee on Investigations.

"OK, I'm not going to get an answer out of you," Subcommitee chairman Carl Levin, Democrat of Michigan said in disgust, after pressing Daniel Sparks, the former mortgage department head of Goldman on whether the firm's own statement to the SEC was accurate.

The statement: "During most of 2007 we maintained a net short position and therefore stood to benefit from a declining mortgage market."

Turned out none of the panelists felt they could comment on the veracity of that statement. Each was focused narrowly on what he described as his own small bit of Goldman's business, and therefore not responsible for any overarching issue with respect to the firm's position on the mortgage market or misuse of its clients.

The shiftiness of the young suits, who dodged and weaved, complained that questions did not strictly fall within their job description, asked for time to re-read documents, and failed to recall specifics, may not have any legal consequences (clearly they have lawyered up and learned to keep their mouths shut). But the great Goldman Sachs, king of Wall Street and alma mater of Obama's Treasury Secretary and Fed chief, is getting a great big black eye.

Sparks and colleagues, including the self-titled "Fabulous Fab," who once claimed credit for creating the complex securities that so undermined investors and the whole economy, looked so sleazy they made anti-abortion nutjob Tom Coburn, Republican of Oklahoma, look reasonable.

The Senate hearing spectacle was an amazing dramatization of the decline of our economy into value-free speculation and fraud.

The hot young bankers, in their early thirties, smirked with barely concealed disdain for the grandfatherly Senators with their folksy speech patterns and layman's lack of familiarity of financial lingo.

And why shouldn't the suits smirk?

Congress handed the whole financial system over to these wiz kids, deregulated their industry, declined to supervise them, courted them for campaign contributions, and joined the entire country in awe of their smarts as their arcane craft seemed to spin endless wealth out of complex instruments almost no one but the fabulous few could understand.

Now, as if in a re-run of the movie Wall Street, we watch old Carl Levin, Senator from of the old economy state of Michigan, lecturing on antique values like honest business practices to the boyish bankers who crashed the auto industry, the mortgage market, and the whole U.S. economy (and yet emerged unscathed, rich as ever. Their old firm, Goldman, is turning profits, thanks to a taxpayer bailout, and posted a stock jump during the hearings--one of three gains among the 79 financial companies in the S&P 500--Bloomberg reported). Despite an interruption by a few protesters demanding that the panelists be arrested and criminally charged, they know they face no such threat. The boys might know they need to listen to pops, but they also know he isn't about to take their allowance away, much less call the cops. They are can hardly contain their impatience to get the whole thing over with.

But for all us regular marks who were watching, there was something salutary about the translation into English of the kinds of fraud Goldman perpetuated.

Senator Ted Kaufman, Democrat of Delaware, asked each panelist if he knew what "stated income loans" were. This is a laughable softball in the world of complicated financial terminology. Stated income loans are mortgage loans to people based on what they state their income to be--in other words, there is no proof of income or ability to pay back the mortgage beyond the borrower's say-so.

Senator Kaufman was incredulous that Goldman was selling securities that were 90 percent stated income loans. He tried to imagine the position of Sparks, Goldman's mortgage guy. "I see these mortgages pouring in and I say, 'Where are they coming from?' . . . . I don't think anybody in America wants to buy a mortgage from someone whose income is what they say it is."

He went on to ask how Goldman chose the mortgage originators it invested with. Sparks talked about the firm's careful research. Kaufman: "You looked at Longbeach [a subprime cesspool] and said, 'Wow, that's a great originator, I'd love to get into them!'"

Sparks began talking about 20-20 hindsight.

"Don't do the hindsight thing with me--come on!" said Kaufman. "This is a target-rich environment for fraud . . . you would think that something is going on here."

What was going on, of course, was that, as the SEC has charged, Goldman was betting against its own clients who were sucker enough to buy its "shitty" products (Levin pulled out the email where that specific term of art was used).

The fabulous Fab is named specifically by the SEC for marketing securities without telling buyers they were chosen with the help of Goldman client Paulson, who bet that those investments would fail, as Goldman itself bet that they would.

Levin got Fab to say that Paulson was not disclosed as having picked the stocks, and that Goldman was only taking the short side of the transaction.

Meanwhile, over on the "Excellence in Broadcasting" network, Rush Limbaugh was putting his own spin on the whole thing. According to Rush, the Democrats created the subprime mortgage market by over-regulating the industry. The bleeding-heart liberals forced lenders to give mortgages to poor people who couldn't afford them (never mind that the mortgage bubble ballooned on George W. Bush' watch, and with his Administration's specific efforts to inflate it).

Rush says over and over that he is not claiming that the bankers' motives were "pure as the wind-driven snow." But like good capitalists, they looked for a way to profit in a bad situation--namely, that the government was forcing them to deal in lousy mortgage loans to a bunch of poor people.

It's a creative spin, and an admirable stab at reversing what looks to be very bad news cycle for the Republicans. After doing their level best to become the party of Wall Street lobbyists--wresting that mantle from the Democrats only in the last year or so--and standing up against financial industry legislation, they are taking a big pre-midterm hit every time the public takes notice of just how bad the banks really are.

All that propaganda about deregulation is falling a little flat for anyone paying attention to the Goldman case.

The real story is not the old pro-business, anti-business narrative that Rush and his fellow Republican windbags flog.

Those Wall Street raptors are not particularly pro-business. They are in the business of gutting and destroying businesses.

In her fantastic new book, Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, Yves Smith shows how the culture of looting and fraud on Wall Street represents the destruction of what were once deemed good capitalist values.

That's why so many Republican members of the Senate panel, from Coburn to John McCain to Susan Collins, expressed disgust with Goldman's backstabbling relationship with its clients.

Smith describes the first big derivatives scandal of the 1990s, when Bankers Trust was taken to court by high-profile clients, including Proctor & Gamble, whom it had systematically defrauded, preying on those firms' trust in its financial expertise.

“Bankers Trust’s actions look bizarre, beyond comprehension to a Main Street businessman," Smith writes. "You don’t prey on your customers, at least if you plan on ending up with something more enduring than a fly-by-night scam. How did Wall Street come to operate with vastly different rules?”

In her book, Smith shows how free-market ideology led directly to the current financial crisis. The driving force of business evolved from simple, old-fashioned greed into the sociopathic culture of looting we see on Wall Street today.

“Leaders at the U.S. Treasury and the Federal Reserve are still clinging desperately to a failed orthodoxy that in turn helped create and now serves to justify an overly powerful and self-interested financial services industry,” she says.

Contrary to Rush and other Republicans' hoary invocation of deregulation and free markets, Smith explains, “regulation-free markets lead to honesty-free markets which lead to quality-free markets which lead to market meltdown.”

That is what has happened to the financial industry and the U.S. economy. And the more that voters understand it, the more quickly we can hope to put an end to the destructive policies that allow honesty-free enterprise to fleece us all.

Ruth Conniff is the political editor of The Progressive magazine.