The events described in the Big Short are a national disgrace. Wall Street was engaged in a fraudulent conspiracy in which the buyer, the seller, the guaranty

The events described in the Big Short are a national disgrace. Wall Street was engaged in a fraudulent conspiracy in which the buyer, the seller, the guaranty company, and the rating agency would willingly suspend disbelief so the buyer could get a 'AAA' security that miraculously paid a few hundred basis points over AAA corporates and count as AAA toward risk-based capital regulations, everyone got fees, and those 'lucky' subprime borrowers could suddenly access unlimited amounts of credit without adequate income or collateral. Then when this created a giant bubble (along with other factors like deregulation, lax application of the regulatory powers that existed, a shockingly long period of lax monetary policy, and human greed) and it all blew up with catastrophic consequences, the banks got a giant bailout, went back to business as usual, and (so far) fended off meaningful reform. They said, who could have known, when the book shows many people did in fact clearly analyze the situation and foresee catastrophe. That being said - there are countries that have highly state-controlled finance sectors. A notable feature is that they don't have vibrant startup and VC sectors. The only reason capital is available in large sums to start up companies like Google and Facebook is because of the possibility of rich IPO exits. Interestingly, some of those countries with regulated and state-owned banks, where the startup scene is nonexistent and the same 50 companies have dominated the economy forever, did not escape reckless behavior and large losses in the banking sector. This is still America, last I checked, and people should be free to take big risks and come up with innovative financial structures. But consumer regulation must prevent toxic consumer products like the certain subprime products that were misleadingly marketed. Banks, which are systemically important, enjoy special privileges that make them a lot of money, and receive implicit and explicit government guarantees, cannot become giant extremely leveraged hedge funds. So, you need to make a distinction between a highly regulated utility financial sector; and a speculative sector which can keep taking the risks and innovating in ways that create value, without the rest of us being on the hook to bail them out when things don't work out.