I take it you don't think it is possible for bad regulation to mislead people? Because that's a piece of what happened in the mortgage crisis, the ratings agencies were given a license to charge fees for putting stamps on bonds, and those bonds were sold into regulated investments like insurance and pensions, investments that people trusted to be in secure assets, in large part because they were regulated.

Take away the regulation and a bunch of that money is stuffed in mattresses, which while perhaps unfortunate, is obviously a better outcome than disappearing into a financial black hole.