Performing a public service was undoubtedly the last thing on the minds of the geniuses who created Abacus 2007-ACI - but I, for one, am grateful to them.

Abacus is an infamous investment package created by the financial alchemists at Goldman Sachs. It fell into infamy because it is the convoluted scheme that has recently caused mighty Goldman to get its tail caught in a crack. According to fraud cops at the Securities and Exchange Commission, Abacus is a scam. Yet I find it an enormously useful tool, for it sheds light on a dirty little secret that the banking behemoths definitely do not want us outsiders catching onto: They have become casino dealers - only without the ethics.

In the past few years, Wall Street has radically shifted its function in our society. Rather than being the financier of productive, job-creating enterprises, the Street has transformed itself into a glitzy global gambling house for the super-rich - and Abacus is bare-naked proof of this.

The idea for Abacus came from a billionaire hedge fund huckster named John Paulson, who had scoured regional mortgage records and picked out a whole mess of them that were destined to go into default. At his urging, Goldman bankers gladly created an investment instrument in 2007 that it could sell to pension funds and wealthy speculators. This instrument allowed "investors" to place bets that the Abacus package of mortgages would go up in value. Paulson paid a $15 million fee to Goldman to market Abacus and put the GS imprimatur on it.

One little detail unmentioned to Abacus buyers was that Paulson had handpicked each of the mortgages in the package specifically because they were headed to foreclosure. Nor was it mentioned that Paulson had quietly placed his own big bet against the mortgages he had packaged. In the end, bettors who were bullish on Abacus lost a billion dollars, and - big surprise - Paulson raked in a billion.

Not only did Goldman pocket fees for taking each of the bets, but it also collected unrevealed millions by placing its own insider wager that the package it was selling would go bad. How ethical is that?

Abacus is what Wall Street has become. This is not investing, it's a craps game, pure and simple. There was no actual value in Abacus - neither Goldman nor Paulson owned any of the mortgages in question. Abacus was a paper construct that simply allowed rich people and huge investment funds to roll the dice on whether struggling homeowners would make it or not. It enriched Paulson and Goldman, but it contributed absolutely nothing of social value to our nation.

With the unfolding Abacus scandal as a backdrop, President Obama marched boldly up to Wall Street last week to confront the narcissistic banksters who've turned America's financial system into Las Vegas East. In the audience, the barons of the Street were braced for some presidential heat, possibly including a populist proposal to shut down their games.

But, the longer Obama spoke, the broader the grins became on the bankers' faces. Far from punishing these fat-cat plutocrats, the president was hailing them as "titans of industry" and pleading for their help in passing a package of modest banking reforms. Obama meekly noted that his proposals are "in the best interest of the financial sector."

I'll say! His reforms, for example, do not ban such abusive gaming schemes as Abacus, instead limiting regulators to gathering information on the scams and reporting their concerns to Congress.

This will be as effective as using a feather for a doorstop, which is why the bankers were grinning. The only way to stop Wall Street's excesses is not to "regulate" them, but to restructure the financial oligopolies that inevitably produce the excesses.

One step in this direction has been proposed by Sen. Sherrod Brown in S.3241, a bill that would prevent huge banks from threatening our whole economy by cutting them down to size, making them small enough that their failure won't harm the rest of us.

For more information, contact a small business network called the Main Street Alliance: mainstreetalliance.org.

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

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