If you needed proof that the regulations put in place under the Sarbanes-Oxley Act are no guarantee against financial chicanery and the madness of crowds, the wreckage of the U.S. housing industry and the resulting distress in credit markets around the world should provide a reality check.

SOX targeted fraud and shady bookkeeping, but it didn't change human nature. Its formal name is the Public Company Accounting Reform and Investor Protection Act. But you can't protect investors from themselves, or from the vagaries of the free market. As long as there is big money involved, people are going to find ways to game systems, and then they'll keep doing it until the systems break down.

Although it was intended as a corrective to the excesses of the last boom/bubble/ bust cycle, SOX would not have prevented the happy talk and willful credulity that fueled the dot-com era. And it wasn't set up to regulate the promiscuous policies of the Federal Reserve, the deliberate opacity of hedge funds and banking houses, or the speculative fever of home buyers this time around. The practices of financial firms as they bought and sold financial instruments based on bundled mortgages and carried them on their books at prices no market would support calls to mind a maxim often credited to the journalist Michael Kinsley: "The scandal isn't what's illegal; the scandal is what's legal."

There is talk of the Securities and Exchange Commission applying the same disclosure rules that apply to companies to the credit rating agencies, which slumbered as the crisis approached. Yet, it's hard to see how a big, SOX-like law could help distressed home buyers, or laid-off bankers, or Wall Street honchos who may have to pass on that new Lamborghini for a quarter -or two. That's not to minimize the countrywide damage, which is far from over. The monthly tally of resets for adjustable-rate mortgages won't peak until March, when they will nearly double the record set this fall, and will stay high through next summer. As many as two million people could lose their homes, according to projections, and the damage to the wider economy is yet to be determined.

None of which means that SOX is a failure. Arguments for or against that position should be based on the law's intent and content and what it has done to date, both good and bad, for companies and investors. But neither does it mean that the answer to the ongoing unpleasantness is more regulation, although that route is already under consideration in Congress.

Eventually this crisis will pass. And soon enough, another crisis will take its place. The truth will remain that regulations, and the technological processes that increasingly undergird compliance with them, cannot solve all problems.

What's more, regulation comes at a cost, and that technology assets used to enforce them might be more productively deployed in pursuing projects aimed at growth and innovation. This doesn't dictate that new laws aren't worth considering. But it does suggest that putting too much faith in regulation and its technological support systems is no substitute for sound management and prudent investing.