The Tip of the Iceberg

What if no questions were asked by either investment banks and lending ratings agencies during the half-decade that subprime mortgages were the dominant factor in the housing market? The New York Attorney General's Office is investigating that question:

A company that analyzed the quality of thousands of home loans for investment banks has agreed to provide evidence to New York state prosecutors that the banks had detailed information about the risks posed by ill-fated subprime mortgages.

Investigators are looking at whether that information, which could have prevented the collapse of securities backed by those loans, was deliberately withheld from investors.

How much easier and cheaper would it have been to regulate the approval process and to punish offenders ahead of time rather trying to investgate and to clean up this mess now?