It makes one sick to think that banks like Goldman Sachs can manipulate the financial system purely for its own purposes without its being illegal. As far as it can be ascertained, the new bank reforms under Dodd-Frank still don't make those actions, or actions like those, illegal. No wonder we are waiting for the next crisis!
However, as some commentators have said, Goldman Sachs could be prosecuted under the Sarbanes-Oxley Act, that makes the CEO and CFO responsible for signing off on the accuracy of their financial reports. But, apparently, those actions don't apply to Goldman Sachs.
Everything seems to boil down to the Commodity Futures Modernization Act (CFMA) of 2000 which
...."officially ensured deregulation of financial products known as over-the-counter derivatives....It clarified the law so that most over-the-counter (OTC) derivative transactions between 'sophisticated parties' would not be regulated as 'futures' ...or as 'securities.' Instead, the major dealers of those products (banks and securities firms) would continue to have their dealings in OTC derivatives supervised by their federal regulators under general 'safety and soundness' standards." (Wikipedia)
You can see why Blankfein insisted on how "sophisticated" his investors were!
President Obama, Part 1
President Obama, Part 2
You can see both videos here