This is an extremely obvious point masquerading as something controversial. In a market with 10 large financial firms, all of varying strength, a capital crisi

This is an extremely obvious point masquerading as something controversial. In a market with 10 large financial firms, all of varying strength, a capital crisis may put a few of the weaker ones out of business, since a capital shortage means that a firm doesn't have enough liquid capital to cover its underwriting obligations and its cash flow needs. When this happens, weaker firms are hamstrung if they can't raise additional capital. Typically the government provides free capital in the form of below market loans which can be turned into profitable short term loans at zero risk. This means that the valuable assets will be gobbled up by the stronger firms and there will be less competition across the board. Thus Goldman, as the strongest global financial firm, stands to gain the most from any crisis. Regulators required all US financial firms to accept bailout assistance precisely to avoid what would have likely been the outcome of the crisis -- one or two super firms. Even if all surviving firms shrunk by 80% post crisis, the resulting diminished competition would be a win for the surviving firms' investors. It's debatable in the scenario of the 2008 crisis whether Goldman would have survived if AIG hadn't been bailed out. I think it likely would have, but it would have had to raise additional capital from investors... As it was Buffet invested around $5B (but could have easily invested much more -- and the yield would have been way better if more competitors had been allowed to fail). As a result of this, and the various interests involved, much effort was expended to preserve the status quo. One might ask what it would take for there to be legitimate competition in the financial services market... My take is that policymakers' desire for cheap (below market price) credit can only be implemented through the sort of public/private partnership... aka socialized financial services like the ones we have in the US. To put it succinctly, cheap credit is a right. It would be interesting to run an experiment to see how much this policy has impacted American democracy (for better and worse). I don't think such an experiment would be possible though.