Unfortunately, lawmakers aren’t doing too well either — and the big bank bonus grab has once again shifted into overdrive.

By Sam Pizzigati

The bankers at Goldman Sachs, Goldman’s CEO pronounced last week, are doing “God’s work.” God, these days, must truly be working in strange ways. Take what happened a few short years ago, right before the bubble burst on the market for subprime-backed securities.

The power suits at Goldman Sachs saw that pop coming. Late in 2006, expecting the worse, they began “selling off” their own inventory of subprime securities and, as the McClatchy newspapers detailed earlier this month, betting against subprimes “in secretive swaps markets.”

Meanwhile, at the same time, Goldman Sachs insiders merrily continued to collect huge fees helping their clients buy up the same subprime paper the insiders knew had no future.

The chair of the theology department at your local university might not consider this sort of duplicitous behavior “God’s work.” Professors at your local law school might even wonder whether behavior this brazen qualifies as criminal.

Last week, in a federal courtroom in Brooklyn, jurors gave Wall Streeters worried about their potential criminal liability some most welcome news. They acquitted two hedge fund managers at the failed Lehman Brothers banking empire on charges they had defrauded their clients — by encouraging them to keep their money in a fund the traders knew to be stuffed with junk securities.

Those clients eventually lost $1.6 billion. The senior of the two Lehman Brothers defendants, Ralph Cioffi, took home $32 million managing their money.

That money ensured the 53-year-old Cioffi the finest lawyering money could buy, and those lawyers did their jobs. They painted a vivid picture of the defendants as “scapegoats” for Wall Street’s nosedive. By the trial’s end, the jurors saw Cioffi more as the valiant captain of a sinking ship than a simple swindler.  

One juror, in an interview after the acquittal, even said she’d be happy to invest her money with the defendants — if she had any money to invest.

The jurors didn’t just acquit the defendants. They returned their verdict in a lightning-quick nine hours. Jurors, in a complicated white-collar case, typically take four or five days just to sort out the evidence.

Federal prosecutors will now likely take far longer than that licking their wounds. Indeed, the surprising outcome of the trial — the first against Wall Street high-flyers since last fall’s meltdown — may mean that no one will ever go to jail for cooking up the deals that drove the global economy into the ditch.

Federal prosecutors, news reports last week agreed, will now be “less likely to bring criminal charges against Wall Street executives for their role in the financial crisis.”

In other words, the American public can no longer count on the threat of criminal prosecutions to scare Wall Street straight.

Americans, unfortunately, can’t seem to count on legislative action either.

Last week, Senate Banking Committee Chairman Chris Dodd introduced “sweeping and long overdue” financial reform legislation that he vowed would protect “consumers and our economy as a whole from another crisis like the one we are now in.”

Dodd’s bill would certainly make some “long overdue” changes. One example: The legislation would yank from big private banks the authority to handpick the officials who run the nation’s regional Federal Reserve banks.

“It’s insane,” the New Republic‘s Noam Scheiber observed last week, “that big Wall Street firms get to choose the directors of the New York Fed, which is often their chief regulator.”

But Dodd’s bill takes a tougher line on Wall Street than the “White House-blessed” legislation that has emerged from the House, and that leaves any “sweeping” new regulation of Wall Street “unlikely to pass this year.”

And Dodd’s bill, even if enacted this year, would do nothing to limit the huge windfall rewards that give Wall Streeters the incentive to behave recklessly in the first place. Those rewards, as Forbes analyst Matthew Goldstein noted last week, drove the distasteful behavior of the two indicted Bearn Stearns hedge fund managers acquitted last week.

Those two, says Goldstein, didn’t behave any differently than their counterparts elsewhere on Wall Street. They all “got greedy on the easy money that was made off of collateralized debt obligations and other subprime-related securities.”

A half-century ago, high tax rates on high incomes — the top tax rate on income over $400,000 stood at 91 percent for most of the 20 years after World War II — effectively kept “easy money” greed in check. Why bother scheming to make “easy money,” after all, if the tax collectors won’t let you keep it?

For a brief moment this past spring, Congress seemed eager to consider a similar cap on “easy money.” In March, as a recent Institute for Policy Studies report reminds us, the House of Representatives actually passed a bill that placed a 90 percent tax on bonus windfalls at an assortment of bailed-out banks.

That bill has sunk without a trace — and bank bonuses are already soaring back to pre-recession levels. In fact, says newly released research from the Financial News and Wealth Bulletin, the 20 largest banks in the United States and Europe have so far this year set aside $224 billion for 2009 pay and bonuses.

At this rate, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Citigroup, and the other 16 financial institutions the new research tracks will stuff the pockets of their leading lights with more than $300 billion in 2009, enough to break their all-time annual pay record.

“God’s work” has never paid so well.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality.