If you’re not scared as hell, you should be.

Two days of Financial Crisis Inquiry Commission hearings have me rattled about how little has changed about our financial system and how much is still at risk. They also have me wondering this: where the hell are the media?

For the first day of panels, reporters were squeezed together in the back rows after filling more reserved seating than I’ve seen at any prior hearing during this session of Congress. But as I wrote previously, after the banksters had preened for the cameras and recited their testimony like four schoolboys BSing their way through an oral report, the press vanished, missing out on more candid and informative witnesses.

Yesterday, day two of the hearings, maybe a dozen reporters attended, fewer than were at for the press conference afterward. What did they miss?

For starters, FDIC Chairman Sheila Bair testified that the credit-default swaps (CDS) market still poses a systemic threat and that even she can’t access CDS information to accurately assess financial institutions’ exposure.

Bair and SEC Chairman Mary Schapiro were in agreement with Commission Chair Phil Angelides’s assessment that the credit rating agencies were “proved to be worthless and remain so today,” given that they are paid by the very Wall Street firms who are profiting from AAA-rated securitized assets.

State attorneys general Lisa Madigan of Illinois and John Suthers of Colorado revealed that not only were their warnings about unscrupulous and predatory lending practices ignored but that their investigations were actively thwarted by federal regulators who in turn did nothing–under the guise of pre-emption.

Madigan also described how rate sheets reveal that Wall Street paid mortgage brokers and loan officers more for risky mortgages–with low teaser rates, pre-payment penalties, low or no documentation–because the consequent higher interest rate paid by the borrower would bring in more income. Wall Street wasn’t the victim of bad underwriting that it claims to be; indeed, it incentivized it.

Denise Voigt Crawford, a Texas securities regulator for twenty-eight years, discussed the revolving door between agencies and the industries they regulate, and the “chilling effect [it has] on the zeal with which you regulate.”

Schapiro, Bair and Madigan argued that Wall Street should have to “skin in the game” when securitizing assets. As things stand now they sell them with a bought and paid for AAA-rating, and then take their profits even if the underlying assets are worthless. Madigan said of mortgage-backed securities, “At the end of the day, the people who had the risk were on the very front end, the borrower, and on the very back end, the investor. All the other market participants were paid along the way, and they didn’t hold on to any of that risk.”

Bair said the agency that could have done something about subprime products early on–when it had a report on problems back in 2000–was the Fed.

“I think the only place to tackle that on a system-wide basis for both banks and non-banks was through…the Fed [which had] the authority to apply rules against abusive lending across the board to both banks and non-banks,” said Bair. “If we had had some good strong constraints at that time, just simple standards like you’ve got to document income and make sure they can repay the loan–not just at the start, but at the reset rate as well–we could have avoided a lot of this.”

So why didn’t the Fed and other federal agencies act?

“It can be very difficult to take away the punch bowl when, you know, people are making money,” said Bair. She also talked about “pushback” from both the industry and the Hill–as late as 2007– when the FDIC tried to “tighten up” on subprime mortgages and commercial real estate.

Reforms discussed included a systemic risk council, a consumer financial protection agency, an industry-funded mechanism so that large firms can be broken up and sold off without taxpayer money, greater disclosure of compensation structures and a single clearinghouse for derivatives like credit-default swaps.

But the task of this commission isn’t to open its hearings by announcing the necessary reforms. It’s to tell the story of what caused this meltdown, which should galvanize public demand for the necessary reforms. In that regard I think the commission is off to a decent start. They are breaking down tough concepts, showing the interconnectedness between Wall Street, legislators and regulators and fishing with dynamite when it comes to exposing bad actors.

But time is short–the FCIC’s report is due in December of this year. It’s going to have to be fearless, and build momentum quickly by bringing in big players and asking them tough questions. That’s the only way a bipartisan populist backlash will fight for reform–and it’s the only way the media might consider showing up too.