Most Americans play by the rules. We work hard, we pay our taxes, we try to be good citizens. When the government urges us to invest for retirement, many of us do, putting hard-earned dollars into the financial system, a system we are told is honest.

But it wasn't honest, was it? Risky loans have caused the American financial system to collapse, and most of us had nothing to do with it. We pay our debts. We don't try to make a fast buck. We believe our government will watch greedy speculators and financial charlatans, but the government did not do that.

As "Talking Points" has demonstrated over the past week, both parties have betrayed the folks. I expect some corporate types to pull shady deals, but I also expect the federal government to prosecute those people, not let them walk out of bankrupt companies with millions.

Christopher Cox, the head of the Securities and Exchange Commission, now admits his watchdog agency failed to watch the bad guys. I hammered Cox two weeks ago and some of have you criticized me for doing that, but I was right. Now at least Cox is man enough to admit what happened.

Not so for Congressman Barney Frank. As a member of the House Finance Committee, Frank has been directly involved with Fannie Mae and Freddie Mac for years.

In 2003, Frank said: "These two entities, Fannie Mae and Freddie Mac, are not facing, not facing any kind of financial crisis. The more people exaggerate these mortgage problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Frank used the federal lending agencies to promote housing loans to poor Americans. But when he took over as Finance chairman in 2006, he saw the risky loans firsthand. So his committee created an oversight body, called the Federal Housing Finance Agency, which got lost in the chaos of Washington.

Now Frank is railing against those who dare criticize him. Writing in the Boston Herald: "Among the more glaring stupidities in the right-wing attack was Bill O'Reilly's asserting that I had spent all this time pounding on the table, demanding more purchases of low-income mortgages."

But according to many of his peers in the House, that's exactly what Frank did.

(BEGIN AUDIO CLIP)

O'REILLY: When you hear Barney Frank saying, oh no, I was the guy who called for tough Freddie and Fannie stuff. When you hear him say that, what do you say?

REP. JOHN CULBERSON, R-TEXAS: That's a joke. That's a joke. This guy, let me tell you, Barney Frank has been hammering Freddie and Fannie for years to buy up politically correct mortgages, which encourages banks to make politically correct loans instead of financially correct loans.

(END AUDIO CLIP)

Now Frank will say it's another right-wing attack, but the record is clear. Fannie and Freddie collapsed on his watch. He should resign.

This entire mess demonstrates that the federal government is simply in disarray, that the trust has been broken between it and the American people. The feds now must fix what they allowed to happen. They must prosecute CEOs who mislead the public, and people like Barney Frank and Christopher Cox need to be replaced. No question.

And that's "The Memo."

Pinheads & Patriots

October is Breast Cancer Awareness Month, and the actress Christina Applegate is front and center. She had a double mastectomy and is discussing her ordeal in the media so other women will become aware of the need for constant check-ups.

Now, I was backstage with Ms. Applegate the last time I appeared with Jay Leno, and she is a very nice person, in addition to being a patriot.

On the pinhead front, another dubious ad running on MSNBC.

Click here to watch "Pinheads & Patriots."

(BEGIN VIDEO CLIP)

GARY COLEMAN, ACTOR: I auctioned off my clothes. I even tried to auction off my car. But when you need cash fast, make the CashCall.

UNIDENTIFIED MALE: Just be sure you can afford the monthly payments before you borrow.

COLEMAN: What you talking about, CashCall?

(END VIDEO CLIP)

Yes, be sure, because if you borrow from those people, you'll pay close to 100 percent interest. That's loan-sharking. FOX News wouldn't take the ad. NBC would. Pinheads.

You can catch Bill O'Reilly's "Talking Points Memo" and "Pinheads & Patriots" weeknights at 8 and 11 p.m. ET on the FOX News Channel and any time on foxnews.com/oreilly. Send your comments to: oreilly@foxnews.com