The end of Glass-Steagal wasn't the biggest problem. It's fine for insurance companies to be able to invest -- as long as those insurance companies can fail. It's just insanity to implicitly tell AIG "sure, you can invest, and if you fail Uncle Sam will guarantee your policies."Yeah, Phil Gramm and Jim Leach, who started de-regulation, e.g repeal of portions of the Glass-Steagall Act, deserve some credit along with Barney Frank, too.
Regulators don't like a whole bunch of little companies with relatively small pay at the top -- they want a few easily-controlled behemoths that act like utilities and provide nice lucrative revolving door at the top. The situation the DOJ allowed to evolve is similar to that of the airlines before deregulation, in which it was basically impossible to start a new airline and everything they did was tightly controlled.
The problems with mortgage-backed securities weren't just fiduciary breach by the big trading houses -- if they were, Bear Stearns would still be around. Again, this is a very silly line of reasoning by Taibbi.
Why isn't Congress in jail? They're the ones that created this problem. Oh, lucky for them, giving misleading testimony to Congress isn't a crime if you're in Congress.