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White-collar workers laid off amid the financial crisis are using the 20-year-old plant-closing law to sue for severance.

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White-collar workers laid off amid the financial crisis are using the 20-year-old plant-closing law to sue their former employers.

Tune in to Anderson Cooper on CNN and watch as he counts down the "10 Most Wanted Culprits of the Collapse." Pick up the New York Post and read about FBI investigations of top financial firms under the headline "Fraud Street." With a bewildering and frightening financial crisis in full swing, the new national pastime is finding someone to blame.

As markets crash and retirement dreams fade away, media and the public are full of outrage at everyone from mortgage brokers and Wall Street CEOs to real estate investors to experts who failed to predict the crisis was coming. Congress hauls the most prominent executives before tough committee hearings, while political candidates blame each other. Pundits proffer lists of the mustache-twirling villains who caused the whole thing.

An Epic Whodunit

Investigators will undoubtedly uncover fraud, cheating, and other criminal behavior. But for now, there is no shortage of players who stand accused of having a hand in the crisis. It just depends on where you think the landslide began or who gave it the biggest push.

If you blame loosened financial regulations, maybe former Sen. Phil Gramm (R-Tex.) or Securities & Exchange Commission Chairman Christopher Cox are your men.

Think that a political push to boost homeownership handed too many people mortgages they couldn't afford? Why not single out Franklin Raines, former CEO of Fannie Mae?

Maybe you think the whole housing bubble could have been avoided with an interest rate increase (Alan Greenspan, step right up). Or, that folks should never have signed up for no-doc, interest-only loans, no matter how many silhouettes danced across their computer screen in a Web ad. In that case, the villain may be no further than your bathroom mirror.

(For a walk through some of those people who are blamed for having a hand in the meltdown, go to our slide show.)

"Whole System" at Fault

Of course, all of these people had something else in mind other than wrecking the U.S. economy. Some of them were making lots and lots of money—for themselves, of course, but also for their investors. Others truly believed in the virtue of freeing the marketplace's animal spirits from the cold hand of government regulation. And how many people were arguing against the virtues of homeownership?

Just the fact that one can assemble such a long list of possible villains gives a hint as to how many institutions, officials, and regular Americans made mistakes. "It's so difficult to pinpoint one person or two people," says Georgetown University finance professor Reena Aggarwal. "It really was the whole system."

Even Presidential candidates eager for votes have acknowledged there's no easy scapegoat. "Part of the reason this crisis occurred is that everyone was living beyond their means—from Wall Street to Washington to even some on Main Street," Senator Barack Obama (D-Ill.) said on Oct. 13.

Indeed, it was a series of bad ideas, surprising linkages, and all-too-predictable blunders that came together to send the U.S. financial system, and then the entire world economy, into a serious credit crunch and global stock panic. That's not to say that it couldn't have been prevented.

Financial Crisis Tests Limits of E.U. Unity

PARIS, Oct. 9 -- Three weeks ago, as the Bush administration struggled to salvage collapsing U.S. investment banks, European leaders calmly reassured their people. Banks on this side of the Atlantic are more wisely regulated, they said, and unlikely to succumb to the chaos on Wall Street.

That was then.

The continent has in the intervening 20 days awakened to discover that its financial system is so interwoven with that of the United States and the rest of the world -- and so vulnerable to shaky assets -- that the virus in New York swiftly spread through the European banking network. In so doing, it revealed that Europe's leaders face challenges just as difficult as those bedeviling Washington and exposed the limits of the European Union's much-heralded economic integration.

But European leaders, with a tradition of state intervention lacking in the United States, responded forcefully outside the E.U. umbrella once they realized the depth of the crisis, bailing out banks, pumping hundreds of billions of dollars into the financial system and declaring publicly that no big financial institution would fail on their watch. Many people here feel they moved more swiftly than their counterparts in Washington. Jean-Claude Trichet, president of the European Central Bank, for example, said Europe had nothing to be ashamed of in its response to the crisis.

As they are increasingly pushed against the wall, some European leaders have begun to say out loud what many seem to have been thinking all along: that the original fault lies with the Bush administration and a hands-off, free-market dogma that led it to stand aside when the venerable Lehman Brothers investment house started to crumble.

"From my point of view, that was a true mistake," French Finance Minister Christine Lagarde said in a radio interview. "You knock over a domino," she added, "and the rest runs the risk of falling, as well." According to reports in Paris, President Nicolas Sarkozy has told associates he feels the same way but has refrained from saying so in public as he seeks to enlist President Bush for a summit to rewrite the rules of world finance.

If Lagarde or Sarkozy recognized at the time that the Lehman Brothers demise was the beginning of catastrophe, they did not sound the alarm. Neither did anyone else among leaders of the 27-nation E.U. "Well, they are human, too," said Katinka Barysch, deputy director of the Center for European Reform in London. "Nobody foresaw this."

One of the first European rescues targeted the giant Fortis group, in a joint operation by the governments of Belgium, the Netherlands and Luxembourg over the weekend of Sept. 27-28. Hardly was that fire put out when Paris and Brussels had to negotiate a bailout of Dexia, a Franco-Belgian bank specializing in lending to local governments, and Germany was forced to salvage its floundering Hypo Real Estate Group. Even Spain, whose banks were thought to be the firmest of all, announced Tuesday that government funds would be used to help liquidity.

The Dexia collapse illustrated two key aspects of Europe's financial turmoil.

First, it got in trouble through a New York subsidiary, Financial Security Assurance, a bond insurance firm that got stung in the U.S. subprime meltdown. Sarkozy was reported to be astounded to learn that what he knew as a wood-paneled institution for local financing in Europe was also a high-risk trader on Wall Street.

Second, Sarkozy and Belgian Prime Minister Yves Leterme made it clear in the bailout talks that their governments would not allow banks under their purview to fail, putting public money on the table at the outset. Similar pledges came from Finance Minister Peer Steinbrueck in Germany and Prime Minister Silvio Berlusconi in Italy. There would, they said in effect, be no Lehman Brothers cases in Europe.

By then, the facile claims that European banks were too well regulated to have any real trouble were long gone. French Prime Minister François Fillon warned that the continent had stood on "the edge of an abyss" until its leaders stepped up to guarantee against the spread of bank failures.

PHOTOS: Major Shakeup in Financial Sector

Central banks pumped tens of billions of dollars into the global financial system today in an effort to ensure that banks and financial firms have adequate cash to operate through the current crisis, while global stocks continued falling in the wake of Wall Street's weekend shakeup.

From Tokyo to New York, central bankers continued a second day of larger-than-normal cash infusions, as financial institutions clamored for the short-term loans they need to operate. In calmer times they often get that cash from one another, but given the widespread sense of crisis, the interest demanded for such loans spiked overnight -- hitting as much as 6 percent, far above the target rate of 2 percent established by the Federal Reserve.

The New York Federal Reserve said this morning that it had put an additional $50 billion into the banking system -- part of a global wave of liquidity offered by its counterparts in other countries. The European Central Bank added about $100 billion to the system, Tokyo $24 billion, and London $36 billion.

The banks had taken similar steps yesterday, with the Fed adding some $70 billion, the most since the Sept. 11, 2001, terrorist attacks.

Stabilizing the day-to-day operating environment for banks, however, did little to stop a global stock sell-off triggered by the failure of Lehman Brothers, the disappearance of Merrill Lynch as an independent company and the shaky state of American International Group, the U.S.'s largest insurance company.

The Dow Jones industrial average fell more than 160 points in the opening minutes of trading, adding another roughly 1.5 percent decline to the 4.4 percent, 500 point drop yesterday. The Standard & Poor's 500-stock index and the Nasdaq experienced similar losses. But all three moderated by midmorning.

A new profit report from Goldman Sachs showed that it is possible to make money in the current environment. The investment bank, which has fared better than many in the turmoil caused by the troubled mortgage industry, said it earned about $845 million in its recent quarter -- a steep decline from its results of a year ago but better than analysts expected.

There was good news on inflation as well: Consumer prices fell 0.1 percent in August, the federal government reported, as a decline in energy costs helped reverse sharp price increases during July and August.

That could figure into Federal Reserve policy discussions this morning, as the central banks weighs whether an interest rate reduction is needed to boost an economy where rising unemployment and falling production are now twinned with a sense of full-blown upheaval in the financial sector.

But it might be all but lost in a flow of events that remains fast-developing. Under close scrutiny: efforts to set up a loan facility for AIG, hit by its exposure to mortgage-related investments, and an announcement by Barclays that it might try to buy a portion of Lehman Brothers out of bankruptcy.

Stock markets in Asia hit two-year lows today, and European exchanges were headed for a second day of steep losses.

Asian markets were closed yesterday but reacted sharply to recent events when they reopened.