cynical, irresponsible, and in some cases fraudulent behaviour was technically `legal'. And it is no surprise that banksters in some cases effectively had extra incentives to behave irresponsibly, because the regulations were designed to make that the path of least resistance. However, you are much more pessimistic than I am that an effective regulatory regime can ever be put in place. You seem to take it as axiomatic that regulators will always and everywhere be captured by industry. For example, you write: Regulators who represent the public interest but whose expected future income derives principally from Wall Street. These people write and enforce the rules. In reality much of the regulation originates from the Street. If you want these people to work for the public you'll have to pay them like the bankers they are supposed to regulate. That's more than POTUS gets paid. A lot more. I agree that the `revolving door' between government and industry is an absolutely huge problem, not just in finance, but in all sectors. My solution: senior bureaucrats and legislators should be required to sign the equivalent of a `no-compete' contract, barring them from any form of employment (including `arm's length consulting') in any industry which they have regulated for a period of at least five years after leaving public life. This should be enforced with very stiff penalties (jail time). Yes, I know, you will say that this will make it impossible to attract talented people to the government unless we pay them