The essence of fraud is enriching yourself by misinforming your customer of the true value of what is being sold. Knowing what we know now, there is little doubt that all three major credit-ratings agencies—Standard & Poor’s, Fitch and Moody’s—committed fraud in connection with their substantially inflated ratings of subprime mortgage debt being packaged and sold by investment firms from 2006 through most of 2008.

But the entity that now is screaming “j’accuse,” the federal government, has even dirtier hands than those of the three credit-rating agencies. In fact, the federal government’s hands are dirty in two ways, to be explored below.

But first let’s look at what we know about the credit agencies, including S&P, which faces a $5 billion fine as a result of a lawsuit filed by Eric Holder’s Justice Department. The federal investigation, along with investigations by the attorneys general of more than a dozen states, have shown that by 2006 the three major ratings agencies surely knew that home prices, which had been increasing annually by double-digit percentages, had peaked and were headed lower. Also, the ratings agencies knew that subprime borrowers were experiencing increasing inability to service their mortgage loans. After all, two-year Treasury rates, on which most adjustable home-mortgage rates were based, had increased to more than 5.3 percent in the spring of 2006 from as low as 1.1 percent in mid-2003.

But, despite the agencies’ knowledge of such facts, the agencies continued to rate the mortgage securities (composed of packages of imperiled mortgages) as “triple A.” As a result, pension funds and investors continued to pour scores of billions of dollars into those improperly rated securities. This is known as “fraud in the inducement.”

We also know that some executives at the ratings agencies had raised concerns internally about how the ratings were being formulated. Other executives argued that lowering ratings on subprime-mortgage packages would drive their mortgage-packager clients (Wall Street investment firms) to the doors of their competitors. After all, the rating agencies charged up to $150,000 to rate a single subprime-mortgage security, and there were hundreds of such securities being rated each financial quarter and flowing out into the hands of investors, many of whom were required, by law or by charter, to hold only “investment grade” securities. Ratings business was simply too lucrative to lose, and executives who lost such business would likely lose their positions. Indeed, each “lost deal” would require the executive responsible for the rating to submit a “lost deal” memorandum to senior management.

There is little doubt that the credit-rating agencies’ inflated ratings of mortgage debt played a significant role in the economic collapse of 2008. In the absence of these inflated ratings, fewer junk-mortgage securities masquerading as investment grade would have been sold. The sale of fewer improperly rated securities would have limited the fallout from their debasement as the underlying mortgages proved to be worth substantially less or, in some cases, actually worthless. Accordingly, these credit-ratings agencies should be held responsible to pay, in the billions, those they defrauded. After all, the agencies were fiduciaries.

But what about the federal government, which certainly contributed far more to the financial meltdown than the rating agencies? And how does one evaluate the Justice Department’s action against S&P in the context of the entire financial mess that became known as the Great Recession?

First, the Obama-Holder Justice Department is suing only one of the three agencies, S&P. Did S&P engage in more egregious conduct than the other two? It did not. Did S&P’s conduct alone result in the mortgage meltdown and economic collapse? No. But S&P differs in one respect from the other two agencies: It was the only agency with the temerity to downgrade the debt of the United States Treasury. So, eighteen months to the day after the downgrade, the empire struck back with a vengeance. The $5 billion judgment it seeks is more than three times the book value of its parent company, McGraw-Hill.

Second, it was the federal government, aided and abetted by its partner, the Federal Reserve, that created the subprime crisis in the first place. Remember, the Community Reinvestment Act, originally enacted during the Carter Administration and expanded during the Clinton Administration, forced banks, in order to remedy “past discrimination” and promote “fairness,” to make lower-down-payment mortgages to people with poor credit. The Federal Reserve, first under Alan Greenspan and then Ben Bernanke, kept interest rates so low that malinvestments in single-family housing ballooned to unsustainable levels. The community and mortgage banks passed the bad paper they had originated on to Fannie Mae and Freddie Mac. Fannie and Freddie in turn sold it to Wall Street. There it was packaged, with Freddie and Fannie’s implied (now, unfortunately, actual) guarantee, and with “triple A” ratings from the three credit-rating agencies.

Indeed, Bernanke’s actions foreshadowed those of the ratings agencies. On his now notorious media tour in 2007, Mr. Bernanke, with all of the gravitas he could muster, announced repeatedly to assembled media idolaters that the U.S. housing market was undoubtedly coming in for a “soft landing” and that the damage to the markets from subprime defaults “appeared to be contained.” The stock market, keying off the Chairman’s sweet sounds, soared to record highs.

Behind closed doors, however, Mr. Bernanke and his acolytes at the Fed were singing a different tune, as reflected in a January 13, 2013, story on PBS, “Records: Reserve Officials Foresaw, Joked About Housing Bubble in 2006”. This piece, an interview by Ray Suarez of The New York Times’ Binyamin Appelbaum, reveals the extent of Bernanke and Co.’s knowledge of problems besetting the housing and mortgage markets. Appelbaum revealed that Fed officials knew in 2006 that homebuilders in many overbuilt markets were offering outsized incentives to get the last of the potential buyers to soak up the oversupply of homes and that some homebuilders were engaging in very questionable tactics to convince home buyers of the continued strength and long-term viability of the housing market. According to Applebaum, Fed officials “would tell stories about builders giving away cars or dressing up empty properties so they looked occupied.”

It took thirty years, 1977 through 2007, for the breaching of the traditional mortgage standards (20 percent down and creditworthy borrowers) to create a wave of bad mortgage paper (commonly referred to as the “housing bubble”) that nearly sank the economy. Imagine just how much worse the bursting of the next bubble will be. That’s the one we may call, in anticipation, the Treasury Bubble. When it hits, the federal government will have no convenient scapegoat against whom to seek revenge with $5 billion lawsuits.

Instead of hundreds of billions of dollars in mortgage losses, papered over by the TARP program, the Treasury Bubble involves the entire debt and financing structure of the United States. Interest rates will soar when there are no more buyers for Treasury securities (which currently amount to more than $16.5 trillion), other than the Federal Reserve, which already is purchasing more than 60 percent of newly issued U.S. Treasury debt through its program of continuous “quantitative easing” (fiat printing of money writ large). This will hit particularly the long end of the bond spectrum. As rates soar, bonds that now are issued at the lowest rates in history will collapse in value, destroying the savings of those who even today are being told that there is no risk to owning Treasuries. But Eric Holder and Barack Obama are not likely to sue themselves, or Mr. Bernanke, for the biggest fraud of all time.

Jay Zawatsky is the CEO of havePower, LLC (a natural gas infrastructure developer) and a professor of business, economics, and finance at Montgomery College in Rockville, Maryland.