The top bankers that were called to testify before the independent Financial Inquiry Crisis Commission [3] in Washington today touched on the drama of the September 2008 financial crisis. They complained of nervous anxiety and sleepless nights. They didn't apologize for a thing, but they did -- to a man -- express their deep appreciation to the American taxpayer for saving their hides.

So how are the big banks treating those taxpayers these days? Almost every banker touted his firm's voluntary housing loan modification efforts to help families facing foreclosure. Jamie Dimon of JP Morgan Chase, for instance, cited 570,000 new trial loan modifications and 112,000 permanent modifications.

In a day's worth of testimony, no one took issue with this happy scenario presented by the grateful bankers until Julia Gordon [4], a housing expert from the Center for Responsive Lending [5], took the stand and dove straight in.

"The bankers touched upon their sleepless nights at the height of the crisis. Today, 6.5 million American are suffering sleepless nights, every night, wondering if they will have a home tomorrow." And it is not over: "our data shows that by the end of 2014, 13 million Americans will lose their homes," she said. Gordon testified that the banks were failing to modify loans at any meaningful rate and that they pursued modification procedures in parallel with foreclosure procedures. The result is that hopeful homeowners are often surprised at the door by sheriff's deputies ready to kick them to the curb.

Gordon continued: "The most tragic aspect of the subprime crisis that triggered the larger financial crisis is that it was utterly unnecessary. The only reason for these products to have been mass-marketed to consumers was for Wall Street and mortgage companies to make quick money by selling (and flipping) large numbers of loans with minimal underwriting. Never have so many toxic loan products been aggressively marketed on such a large scale with such loose lending rules."

Fraud is at the heart of the issue. A study for the Wall Street Journal [6] found that, of the subprime loans originated in 2006 that were packaged into securities and sold to investors, 61 percent "went to people with credit scores high enough to often qualify for conventional [i.e., prime] loans with far better terms." The result? The asset base of entire neighborhoods was "wiped out" according to Gordon, hitting Latino and African American communities the hardest.

While some of the bankers admitted to making mistakes, for instance, Lloyd Blankfein of Goldman Sach's [7] bravely admitted to contributing to "froth" in the market, none of the bankers owned up to Wall Street's real role in turning the American Dream into the American Nightmare.

"Consumers were not asking for these loans, Wall Street was asking for these loans. They told brokers that they would pay more for "no doc" loans, and the brokers turned around and push marketed them to consumers," said Gordon.

Her recommendations? The big banks should not be permitted to initiate foreclosures while servicers evaluate eligibility for loan modifications. Homeowners should be allowed to ask a judge to modify their first home in bankruptcy proceedings, in the same manner in which the wealthy can have their debt on vacation homes and yachts modified. Finally, Congress needs to pass a strong and independent Consumer Financial Protection Agency [8] to protect consumers suffering from fraud and abuse in its initial stages before the practice is able to bring down the world's economy.

To access the day's testimony or to send questions for commission members to ask of the people testifying tomorrow, go to the Financial Crisis Inquiry Commission website [9].