A big question in making credit providers liable for incorrectly granting credit is the specific definition of 'correctly'. Sadly, just 'issued without approva

A big question in making credit providers liable for incorrectly granting credit is the specific definition of 'correctly'. Sadly, just 'issued without approval' is a bit too wide a definition. You need to deal with 'john' helping others fraudulently impersonating 'john'. In that case, the bank should not be liable. In general, I see potential for a weird type of coorperation. They verify identities for credit providers for a fee. In return, this coorperation takes on the liability of wrongly verifying identities. Question is, given the importance of such a coorperation, how much regulation is needed? At what point is there so much regulation required that it is better left as a government-run service?