It is hard not to notice that two of the regulators who stand out for doing the right thing in this incredible financial mess are women. Brooksley Born, as chair of the Commodity Futures Trading Commission under President Clinton, wanted to regulate credit default swaps and other derivative instruments back in the late 90s. Her effort was torpedoed by Clinton's economic heavyweights: Alan Greenspan, Robert Rubin and Larry Summers.

    More recently, Sheila Bair, the chair of the Federal Deposit Insurance Cooperation (FDIC), has been a pesky voice, arguing that the purpose of the financial bailouts is not to ensure that the Robert Rubins of the world get to keep their day jobs at the Wall Street banks. She has been arguing that the banks that received public money should be required to rewrite mortgage terms so that more homeowners are able to stay in their homes.

    The role of these two women is surprising because finance, and its regulation, continues to be an area that is heavily dominated by men. Therefore, it is striking that just about the only regulators who stand out for trying to do the right thing in this tsunami of garbage finance are women.

    While some of the luminaries of the economics profession might seek to explain the unusual role of women regulators by biological differences between the sexes, there is a more obvious explanation. Basically, the women who enter the financial world have not been fully integrated into the club. They are still outsiders. Therefore, they are more likely to blow the whistle on the sweet deals that can make hundreds of millions for the boys, while leaving the rest of us out in the cold.

    This point was made explicitly in a surreptitious campaign to undermine Bair's standing in the Obama administration. According to one of the anonymous complainants, Bair is not a team player.

    This statement was intended as an indictment of her conduct as FDIC chair, but it actually looks like the highest possible form of praise. After all, this team of financial regulators makes the 1962 Mets look like world champions. If Bair doesn't fit in, then this is all for the good.

    If we needed any further evidence that the financial industry suffered from too much deference to insiders, Bernard Madoff filled the gap. He apparently ran a simple-minded Ponzi scheme for 30 years, stealing tens of billions of dollars from wealthy individuals, private charities and even large banks.

    When some investors and reporters raised suspicions about Mr. Madoff, no one bothered to seriously investigate because he was such a good guy. After all, he belonged to all the right clubs, generously supported charities and was even a founder of the Nasdaq.

    The regulators don't investigate respectable people like Madoff, and this is precisely the problem.

    The regulators are not supposed to be friends of the financial industry. They are the cops, who keep the industry from running off with our money. Remember, the big actors in the industry all benefit from a government insurance policy called "too big to fail."

    As any good believer in the free market knows, the finance boys will do everything they can to maximize the value of this government insurance policy. This means taking the biggest possible risks since, at the end of the day, the taxpayers, not the firm's creditors or executives, will pick up the tab. The financial regulators are the ones who are supposed to keep the banks from taking advantage of their government provided insurance, in addition to keeping them from ripping off pension funds, small city school districts, private charities, and any other suckers they find.

    It remains to be seen whether the Obama administration will be prepared to seriously regulate the financial industry. President Obama did pick a woman, Mary Schapiro, to be head of the Securities and Exchange Commission, but her past associations with the financial industry make her look like one of the boys.

    In the holiday spirit, perhaps we should give Schapiro and Obama the benefit of the doubt. But the reality is that the US financial industry is a cesspool. Cleaning it up must be a top priority for the Obama administration. The public must insist on a much smaller, cleaner industry and long jail sentences for the folks who brought us this economic disaster.