David Prosser: Goldman Sachs is just the start of the battle to tame Wall Street

Outlook: There is a rather wonderful page on Twitter spoofing Lucas van Praag, the urbane communications chief of the world's most hated/successful investment bank (delete as you feel appropriate). Yesterday, fake Lucas tweeted: "Christ. Why the hell is Tourre showing up with such a lame defence? Oh yeah. Because he's the fall guy."

Funny, yes, but this is hardly a laughing matter. The travails of Goldman Sachs are shining a light on the madness of America's sub-prime housing market in the run up to the breathtaking collapse of 2007. And the defence of Fabrice Tourre – fabulous Fab as we have come to know him – was no more and no less than the defence Goldman itself has offered against the fraud charges laid against it by the SEC: that it merely made a market, that it did not bet against its clients, and that it lost more money than it made on the Abacus deal at the centre of the storm.

If anything, Mr Tourre was a little more compelling in his appearance in front of the US Senate yesterday than his more senior Goldman colleagues. He at least appears to have had some understanding of the market the bank was making, though not of the conflict of interest involved in not telling one client that the investor on the opposite side of the trade was the world's best known and richest shorter of sub-prime debt.

That impression may actually suit Goldman, which, as Twitter's "fake Lucas" rather unkindly suggests, would no doubt not be too miserable if the world concluded Mr Tourre was some sort of rogue trader, rather than a cog in the bank's machine.

Still, if you want a clear picture of what Goldman and other banks were up to in the run up to the crunch, yesterday's hearings did not offer it. Try, instead, reading Michael Lewis's The Big Short, published just weeks before this case broke. Its explanation of how a handful of individuals, lead by John Paulson, the hedge fund investor with whom Goldman dealt on Abacus, made a killing betting on the sub-prime collapse is difficult to believe. Not because the tale is complex, but because the incompetence of Wall Street and investors around the world was so breathtaking. Not to mention the credit ratings agencies and the regulators.

Mr Lewis, interviewed in The Independent last week, expressed his view that Goldman will, in the end, lose this case and that its most senior executives will then have to stand down.

We shall see. But Wall Street retains many of its staunchest allies on Capitol Hill. The interrogations its representatives faced from Republican senators yesterday were noticeably tamer than those put by the Democrats. And the hearing came hard on the heels of President Obama's failure to get his banking regulation reform programme through the Senate. If the administration could not get its legislation approved in this, of all weeks, one wonders when it might be able to do so – and what compromises it will have to make.