America’s Financial Crisis Inquiry Commission (the FCIC) having accused Goldman Sachs of stonewalling their investigations into dirty meltdown deeds, the notorious firm is passing through the embattled stage, and hurtling on towards ‘beleaguered’. My view for nearly a month now has been that there is no way Blankfein can survive (and the Board probably already realises this) but that anyway one or more of these charges is bound to stick.

The list of pending investigations is very long indeed. It includes the fraud charges being brought by David Mapley over a major Australian default package scam; further charges involving alleged fraudulent conspiracy in the Semgroup Oil collapse; ongoing FSA investigationn in the UK of ‘wrongdoing’; the Brussels commission’s accusations of aiding and abetting Greece in its mendacity concerning debt; SEC offences (for which the firm already settled on a plea bargain); and now a real, live subpoena – ‘come to Court or go to Jail’ – from the FCIC. As time goes on, the accusations too are moving on from misdemeanours to fraud to criminal conspiracy to criminal fraud.

The problem for the regulators and the Fed are twofold. First, if they turn a blind eye to some of this stuff, the American public’s faith in egalitarian justice will be badly shaken….and Obama will look like a man who said yes we can, but turned out not to be that bothered really. And second, it must be clear by now to even the most hardline corporate Republican that the US banking system at a senior level is full of bad guys. The year before last, it was all about dumb guys. Now it’s about a few truly evil people conspiring to do illegally well out of the misfortune of everyone else.

The sort of thing of which Goldman stands accused is usually found on those far Left websites where they write in Soviet syntax and use ten exclamation marks per paragraph. If, for example, somebody had told me even a year ago that the firm’s alleged marketing proposal to the Athens government would eventually cause the break-up of the EU, I’d have kept that person occupied while someone else made the right care-worker phone calls. This is now, however, a distinct possibility.

But what my own sources (and many media owned by real people) have been saying for some time is that the stunts pulled by Goldman Sachs are pretty generic in the sector. Merchant and advisory banking seems in need of not so much repair as demolition…starting with many of the Big Dicks swinging along its corridors. That makes the second regulatory problem a very real one: pull off some old plaster and oops, the wall fell down. Pull up the carpets and oops there are no foundations. Open that cupboard and oops there’s a dead person in there. And so on and so on.

Whether we like it or not, JP Morgan, Morgan Stanley, Goldman Sachs and all the usual suspects need – until we can find something better – to keep on functioning: otherwise, what’s being billed in the States as a double-dip recession will become a doubly-torpedoed ship. If you’ve never seen capitalism in genuine crisis, then this is it.

More than anything else, the issue is a real test for Obama the man: is he just this cool dude with a talent for rhetoric, or is there really some beef in the sandwich? My view has always been the former, I would’ve preferred Mrs Clinton in the Oval Office: but it was history being made, and you can’t fight that. It’s just that history sometimes puts people in the right place at the wrong time.

Because (I suspect) he’s a greenhorn about high finance and real business, Obama has saddled himself with advisors, many of whom caused the last mess. The major exception – Geithner – strikes me as a classic high IQ lightweight. Half the time I don’t really understand what he’s on about, which is always a bad sign. He certainly, however, doesn’t strike me as Eliot Ness.

Events are about to accelerate, both in the big world outside and the murky world of rooms off courtrooms and Board meetings. As a Democratic President with a growing image for words rather than action, Barack Obama has no choice: if he is not to lose the dispossessed hopefuls franchise that put him in the White House, he must pursue every fraud until every villain is in jail….especially one who so obviously has it in for him.

Will this destroy the banking system? I think the question is both hypocritical and academic: the Law is there to help destroy anything that’s bad for society – and anyway, the banking system is destroying itself.

Related stories: The Timberwolf fraud. The Semgroup Fraud.