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In Washington, lawmakers are scrambling to find a solution to the subprime mortgage crisis. One plan under consideration would freeze interest rates on some borrower’s variable-rate loans. Another proposal involves raising the dollar limitations on mortgages the Federal Housing Administration can legally insure. And there are some who think the U.S. Government should establish a federal agency to refinance troubled loans at lower interest rates. But in the rush to find a remedy, one action is noticeably missing: where are the indictments, legal or editorial, for the people responsible for creating this mess?

I remember when Freddie Mac first began securitizing residential mortgages in the 1980s. Banks, including the one where I worked at the time, discovered a financial windfall. We were able to rid our balance sheets of fixed-rate mortgages, enjoy an immediate boost in revenue, and earn ongoing fees for servicing the loans. But once the income stream started, there was no turning back.

Financial institutions started relying on securitization revenue to meet their quarterly earnings forecasts. Hungry for mortgages to securitize, banks got lax in their lending practices; as a result, commission-based loan originators approved nearly every homebuyer’s application. Mortgage-backed bond issuers, who buy loans from banks, also relaxed their standards; instead of demanding an 80/20 loan-to-equity ratio for mortgages they bought, they gradually lowered the required equity amount from 20 percent of the home’s value to no equity at all. The flow of easy mortgage money led to inflated home prices and, fortunately for banks, higher mortgage amounts. In short, mortgage securitization turned many bankers into predatory lenders.

To be sure, the subprime mortgage meltdown has cost high-ranking officials at companies such as Bear Stearns, Merrill Lynch, and Citigroup their jobs, but there have been few criminal charges filed. However, the attorneys general of California and Illinois are investigating Countrywide Financial, which recently announced that it would lay off 12,000 workers, for dubious lending practices. Hopefully, more probes will follow.

Some will argue that borrowers are responsible for getting themselves in over their heads. But many lenders lured people into loans they couldn’t afford. And for that, they should face criminal prosecution.