The key thing with regulating margin trade is that most home loans have less equity requirements than margin trading accounts - you can get homes with zero equity sans closing costs these days, while you have to maintain at least 25% equity in a margin trading account, and people don't have much of an issue with either.

As long as the economy, the financial, employment and housing markets behave somewhat reasonable, even extreme leverage is not a problem... but in sudden uncontrolled crashes, that amount of collective leverage explodes backwards and everyone has a problem.

I'm actually not sure if it is possible to regulate margin at all to a resilience degree that stands up to market depressions, given that debt and leverage are essential to the working of any economic system (including all the various forms of socialism!) in a scarcity-based world itself.