Mr CEO_Timmy's_Father gave little Timmy an unlimited credit card, that he could use whenever and for whatever little Timmy wanted.
-Timmy has a sweet tooth, and decides to go to CandyStore_01 and buy $500 worth of candy.
-Timmy opponents do not thing it's wise for little Timmy to be able to buy so much candy from CandyStore_01. Not only that, but it will surely rot his teeth out they say! Timmy opponents decide to Regulate Timmy's ability to buy more then $10 of candy from CandyStore_01 in any given week.
-Timmy upset with this limitation decides to go to Candystore_02 and again buy $500 worth of candy and laughs at the Timmy opponents.
-Timmy opponents outraged again at Timmy, decide to Regulate Timmy's ability to buy candy at CandyStore_02 and are once again happy with the world they created where Timmy is unable to buy more then $10 of candy from CandyStore_01 and -CandyStore_02 store. Surely they have bested little Timmy this time!
-Timmy now having more then $1k worth of candy doesn't even bother with CandyStore_03, and decides to go to Ice_Cream_Shop_01 and buy $500 worth of premium ice cream.
-Again, Timmy opponents do not believe this is wise for little Timmy to have so much ice cream and decide to regulate little Timmy's ability to purchase from Ice_Cream_Shop_01. And once again a limit of $10 is imposed on Ice_Cream_Shop_01 for any given week. And again, Timmy opponents rejoice in their intellect in solving little Timmy's sweet tooth problem!
Do I really need to continue this?
The quantity of regulations has never been a problem? Try opening a business, and run it for a few decades and employ more then a few people, and get back to me on that silly comment.
There are no limits to the amount of regulations that can be written and people at the top can still figure a way around them because they are given unfair/non market based advantages.
Just like my stupid example, if you give a company, like yours (major bank) some unfair advantages a la 1-2% fed funds rates for a few years, can you really then be surprised they decided to loan money at 5-7% out to people who otherwise wouldn't be able to qualify for said loan a few years prior???
You can look at solving a problem like this one of 2 ways, endless regulations trying to stop all this free money from popping up in places you don't like. Or perhaps taking away the free money? Clearly this is oversimplification of a massive problem, fannie/freddie (with the wink/nod that they were backed up by the government) buying up massive amounts of these loans, even subprime mortgages that they couldn't even issue... but had no problems buying from everyone else happily issuing them around the country. Or the fact that fannie/freddie didn't bother to calculate the borrowers ability to repay the loan based off the interest rate ARM would reset to in a few years, but only the teaser rate.
But ya dude, regulation would have totally prevented that meltdown...
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