...doing the same thing over and over again and expecting different results. The latest failure:

Securities and Exchange Commission Chairman Mary Schapiro said her agency’s oversight of Lehman Brothers Holdings Inc. was “terribly flawed,” days after a bankruptcy examiner found the SEC didn’t try to stop the firm’s exaggeration of liquid assets.

“It was so terribly flawed in design and execution,” Schapiro testified to a Congressional committee today, referring to SEC examinations aimed at monitoring the soundness of Wall Street’s biggest investment banks. “We were ill-suited because of our enforcement and disclosure mentality.”

Eighteen months after Lehman’s collapse, the 2,200-page report by Anton Valukas has reignited the debate over what regulators should have known and done before Lehman’s collapse triggered a global financial crisis. The House Financial Services Committee said today it will hold a hearing so that lawmakers can question U.S. watchdogs at the time.

Our current regulatory structures are failing the American people, yet, Wall Street is arguing for more of the same. That's ridiculous. We need real change in our regulatory environment, and, we need that change now.

An untold story in the Lehman saga is the role that George W. Bush's SEC Chairman Christopher Cox played. Did he and his Bush Administration cronies look the other way as Wall Street helped usher in the greatest financial crisis since the Great Depression?

“Either the SEC and the New York Federal Reserve failed to discover the ongoing accounting fraud at Lehman, or they turned a blind eye,” said Representative Spencer Bachus, an Alabama Republican on the House panel. “In either case, the actions of these two regulators represent a grave failure and should be explored at a public hearing.”

Bachus wants to summon former SEC Chairman Christopher Cox, then-Lehman Chief Executive Officer Richard Fuld and ex-New York Fed President Timothy F. Geithner, who is now U.S. Treasury Secretary. Schapiro, Cox’s successor, took her post in January 2009...

A week after Lehman’s collapse, Cox told Congress that no law authorized the voluntary program to prescribe a companywide liquidity level or enforce SEC leverage requirements. The SEC announced Sept. 26, 2008, the program was ending.

Valukas didn’t draw conclusions in the report about whether the SEC’s interactions with Lehman were appropriate. The SEC allows firms to determine how they disclose liquid assets, so long as they don’t deceive investors. Schapiro has replaced most of the agency’s top officials.

America deserves answers from Christopher Cox and his boss, George W. Bush. It's time for the Financial Crisis Inquiry Commission to look into the role that the previous Administration played in contributing to the financial crisis.

The Lehman rabbit hole is getting deeper and deeper. And, it's raising questions about the practices of other troubled entities, like AIG. Eliot Spitzer and William K. Black write:

In December, we argued the urgent need to make public A.I.G.'s emails and "key internal accounting documents and financial models." A.I.G.'s schemes were at the center of the economic meltdown. Three months later, a year-long report by court-appointed bank examiner Anton Valukas makes it abundantly clear why such investigations are critical to the recovery of our financial system. Every time someone takes a serious look, a new scandal emerges.

The damning 2,200-page report, released last Friday, examines the reasons behind Lehman's failure in September 2008. It reveals on and off balance-sheet accounting practices the firm's managers used to deceive the public about Lehman's true financial condition. Our investigations have shown for years that accounting is the "weapon of choice" for financial deception. Valukas's findings reveal how Lehman used $50 billion in "repo" loans to fool investors into thinking that it was on sound financial footing. As our December co-author Frank Partnoy recently explained as part of a major report of the Roosevelt Institute, "Make Markets Be Markets," such abusive off-balance accounting was and is endemic. It was a major cause of the financial crisis, and it will lead to future crises.

The rabbit hole gets deeper:

The Valukas report also exposes the dysfunctional relationship between the country's main regulatory bodies and the systemically dangerous institutions (SDIs) they are supposed to be policing. The NY Fed, the regulatory agency led by then FRBNY President Geithner, has a clear statutory mission to promote the safety and soundness of the banking system and compliance with the law. Yet it stood by while Lehman deceived the public through a scheme that FRBNY officials likened to a "three card monte routine" (p. 1470).

Spitzer and Black are calling for a Congressional investigation into the report.

We believe that the Valukas report cries out for an immediate Congressional investigation. As we did with A.I.G., we demand the release of the e-mails and internal documents from the New York Fed and Lehman executives that pertain to analyses of Lehman's financial soundness. What downside can there possibly be in making these records available for public analysis and scrutiny?

Three years since the collapse of the secondary market in toxic mortgage product, we have yet to see significant prosecutions of the kind of fraud exposed in the Valukas report. The SDIs, with Bernanke's open support, exorted the accounting standards board (FASB) to change the rules so that banks no longer need to recognize their losses. This has made the SDIs appear profitable and allows them to pay their executives massive, unearned bonuses based on fictional profits.

It's time to get to the bottom of the Lehman affair and put policies into place that will ensure that these kind of swindles don't happen again.