The financial reform bill may or may not have the teeth necessary to create true safety for the economy. But regulators can right now enforce the laws on the books. And maybe we’re starting to see that.

Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.

The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.

The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment.

The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market. Those deals, which were the subject of an article in The New York Times in December, initially protected Goldman from losses when the mortgage market disintegrated and later yielded profits for the bank.

Goldman stock fell TEN PERCENT this morning on the news.

The SEC has the capacity to investigate and prosecute deals like this. More than anything, the threat of real penalties – and while this is a civil suit, jail time – will provide the stability that we need in the economy and provide a deterrent to the financial sector to gamble with impunity.

It’s one suit, on one investment. But it could open the floodgates.

Something tells me that the Bat-Phone just rang in Tim Geithner’s office.

UPDATE: You know Bernie Sanders would be the first out of the gate to praise this.

Sen. Bernie Sanders (Vt.), a liberal independent who caucuses with Democrats, applauded the decision to file civil charges against the Wall Street giant for its use of financial instruments that bet on the failure of subprime mortgages and the larger housing market.

“While its action was slow in coming, I applaud the SEC for finally beginning to deal with the illegal behavior of major Wall Street firms which, in my view, knowingly sold junk products and as a result helped cause the worst recession since the 1930s,” Sanders said Friday in a statement.

UPDATE II: Via eCAHNomincs in comments, the complaint.