Anyone who tries to explain the Wall Street crisis in a single sound-bite is foolish…or worse. But House Democratic Leaders have found a culprit they can agree on: deregulation.

“This is the fruit of decades of ‘leave the market alone, don’t regulate it. It will take care of itself,” Says House Banking Committee Chairman Barney Frank. His solution? “Clearly we’ve got to get some regulation here.”

“The Bush Administration’s eight long years of failed deregulation policies” is the problem, declares House Speaker Nancy Pelosi.

“A stark failure of the economy and this administration’s laissez faire, take the referee off the field, let anyone do whatever they want to do and everything will be fine,” adds House Democratic Leader Steny Hoyer.

The problem with the Democrats’ “deregulation did it” meme is that it didn’t happen – deregulation that is.

The most significant financial regulatory action in the Bush Administration was Sarbanes-Oxley (Sarbox), a law significantly increasing regulation of the accounting and securities businesses. It spawned twenty – count-em – twenty new rulemakings at the Securities and Exchange Commission, and created a whole new regulatory organ, the Public Company Accounting Oversight Board (PCAOB).

If that is the “deregulation” House Leaders want to reverse, I’m with them. Describing what happened during the Bush Administration as “deregulation” just doesn’t square with the facts.

Bad choices by government have contributed to the current crisis, but calls to “get some regulation here,” neither illuminate those mistakes nor suggest what choices may be better.

PCAOB’s job is to prevent unexpected bankruptcies due to over-valued assets. Its chosen method was a welter a new accounting rules. Not only did the rules not work, some commentators have pointed to the PCAOB accounting rules as triggering the current crisis.

One result of Sarbox was for capital to flee to private equity funds, or to London, beyond reach of the new rules. This capital flight weakened American investment banks by shrinking their markets. And by the way, the three companies that have required rescue were all regulated by PCAOB. Less-regulated private equity funds seem to be doing just fine.

It is true that the 1999 repeal of the 1930s-era Glass-Steagal Act, requiring separation of commercial and investment banking, represented significant deregulation. But that repeal was signed by President Clinton, and implemented enthusiastically by his regulators. A good thing too, since that deregulation allowed Wall Street’s two remaining investment banks to avoid bailouts this week by transforming themselves into commercial banks.

So it seems some Bush-era regulation may have triggered the current crisis, and some Clinton-era deregulation provided an escape valve. Does this prove that more regulation is bad, and less is good? The wiser conclusion is that there seem to be good and bad ways to regulate.

Anyone who has paid attention over the last ten days has to conclude that financial regulation is a complex business. Treasury, the Fed, SEC, FDIC, and state insurance regulators all play a role. There are even international standards in play. Its an area not well suited to sound-bites.

It would be nice, once the immediate crisis is addressed, if Congress took a considered look at this regulatory contraption. Undoubtedly there are some parts that aren’t working well.