The current banking system has big failure modes and there is a constant threat of regulatory capture. It's still much better than alternatives. In a regulated

The current banking system has big failure modes and there is a constant threat of regulatory capture. It's still much better than alternatives. In a regulated financial environment, financial innovation creates bubbles and failures in those regions that are outside regulation and transparency. The subprime mortgage crisis was able to grow because CDO's and MBSes were outside regulators' sight. The next financial crisis is probably simmering in shadow margin and shadow banking – not well-regulated areas. When those risks actualize, then there will be more regulation.