"Everybody is trading on the inside somehow or another, so this isn't particularly surprising," Rolling Stone reporter Matt Taibbi said two years ago. "A lot of sources I talked to suggested that this is endemic to the entire culture. The real issue here is it's everywhere ... And the fear is there's no end to it."

There may be some end in sight to endemic insider trading. The Securities and Exchange Commission recently began cracking down, bringing 58 charges last year alone to high-profile money managers flagrantly breaking the law by leveraging informational advantages not available to small investors.

But there's far more to be done.

Last week, I sat down with Ron Suskind, a Pulitzer Prize-winning author of five books. His latest, Confidence Men, explores President Obama's first two years in the White House, which provided Suskind with a unique view on the relationship between Washington and Wall Street. I asked him what we can do about insider trading. Here's what he had to say (transcript follows):

Morgan Housel: Now they're really starting to crack down on insider trading. Is that just the tip of an iceberg that's going to keep going?

Ron Suskind: Look, how many prosecutions and jail time are we talking? I mean, I know they're cracking down. [Convicted inside trader Dennis] Levine says to me "You need to create a cultural moment." That's interesting, because someone from the Justice Department called me up after the book and says, "We're trying to do this." And Levine says, "You gotta go on a sunny day, you gotta get 100 of the toughest federal prosecutors you can find, and you gotta send out 300 indictments, on a sunny day at about three o'clock. And you gotta send in people in uniforms, and you gotta perp-walk the heads of all the major investment houses out into the street in cuffs." You know, like the Sicilian Mob trials where they're all out there. And you gotta get a lot of cameras, too.

You see, that's how you create a cultural moment. Because everyone left behind, and they're mostly guys, they all say the same thing at the same moment. "Geez, if that happened to me, my mother would be so ashamed of me." That's how you do it. You do it by saying "Guess what? There are consequences here. I don't care how many lawyers you've hired. I don't care how much you're paying Sullivan & Cromwell [large law firm]. You're going to go down. We're going to turn evidence, and we're going to catch the middle player, and we're going to get to the top player."

They're not yet doing that. And, ultimately, there is progress. I mean, frankly, look at the hedge funds. Look at the hedge funds after this starts to hit. Well, their performance is pretty slack. Why is that? Because they're like, "Ee, yikes. I don't know how I'm going to get the goods. They're kinda watching us."

I think that's for the good. Because, ultimately, a lot of hedge fund managers were doing something that I don't consider all that legitimate. I want to say, look, the country needs you. Go get a real job! They need you out in the Midwest. They need you to build innovation and fund it. We're in global battle for who is going to create the most robust economy. We can't do it by saying "we don't make things anymore, let other people innovate, and we essentially will be the capital allocator. And we'll treat them like the Sopranos and we'll get a nice vig."

That won't work! And ultimately the big problem is that you've got a whole river of human capital moving to some of these allocation games for capital. Which is real human talent, and should be applied to the thousands fields across America that really need our best and brightest students and thinkers. Just look at where the river again is going back to Wall Street. That's a problem. Human capital is one of our great resources, and it doesn't change that flow unless you create cultural change.

Morgan Housel: Do people on Wall Street agree with that view, or do they think they're doing good for society?

Ron Suskind: No, deep down they get this. 

Morgan Housel doesn't own shares in any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.