Well, obviously mismanagement, greed, and stupidity caused them to collapse, but regulations forbade even the formation of such multi-national investment house+bank combinations in the past. I assume that the hope was that it would prevent banks from taking unnecessary risks with people's money. Which was obviously reversed with a good old, "private industry always comes up with the most efficient model, never fails, never commits fraud, and is always perfect" crap that like to get pushed around in government.

> Which was obviously reversed with a good old, "private industry always comes up with the most efficient model, never fails, never commits fraud, and is always perfect" crap that like to get pushed around in government.

The only folks who ever say that do so as above, attributing that belief to others in an attempt to cover up their lack of an actual argument.

Govt is subject to exactly the same failings, with one important difference - it gets to tax and coerce folks and there's even less connection to results.

Even the most corrupt company would have problems keeping Barney Frank around, yet he's still a major player in govt, driving housing policy....

> I assume that the hope

Such a firm connection to reality.

How about the reality that regulation caused a lot of the problems?

Start with Fannie Mae and Freddie Mac. Ask whether anyone would be willing to make NINJa loans without a govt guarantee. And, if someone made such loans, ask whether anyone would buy them.

US Govt policy pretty much guaranteed that the mortage industry would take a huge fall. Even now, it's trying to keep people in houses that they can't afford. And, the money is coming from folks who bought what they could afford or rented because they couldn't afford to buy.