People seem to operate based upon the rules and incentives that pertain: official and unofficial. The balance between transparency and privacy is altered by rules changes. It seems to me that being humans ourselves we should be able to perceive potential failure points in our systems. But instead of examining empirical evidence, we tend to operate from belief and ideology. That impedes our ability to understand what happens and to remake our model. We set up a system that allows for abuse in secret then act surprised that abuse has occurred. Collapses are actually inevitable in this circumstance, we assume because it doesn’t happen instantaneously that we have a sound system.
So we are usually playing craps but kidding ourselves into believing in some awesome new paradigm. What tended to be eliminated in the financial services industry has been compliance and oversight, and to allow mixing of different non equivalent, competing fiduciary responsibilities in the same entity, and to let accountability dissolve through special accounting practices that are manipulative. Additionally federal guarantees affect behavior by encouragingly gambling style risk.
At this point we should probably move away from rules based regulations that seem prone to legal manipulation and move to principle based regs.