Money follows profits in the same way that water follows gravity - it flows into every nook and cranny it can find. The rules and regulations governing financia

Money follows profits in the same way that water follows gravity - it flows into every nook and cranny it can find. The rules and regulations governing financial services are like the tanks and pipes through which water flows. If there's a (loop)hole, it will find it and drip through. If the rules that govern money are too weak, they will be eroded, in the same way that flowing water erodes a riverbank. Loopholes will always be exploited. If a financial institution decides not to exploit a potentially profitable opportunity, someone else will (and reap the rewards). After a while, your shareholders are going to be asking pointed questions about why your competitors are more profitable. Eventually, you're likely to be fired and replaced, or your company will be acquired by one of your more profitable competitors. Thus, in a Darwinistic fashion, those who exploit the loopholes prosper, while those to stand on their principles are eclipsed and, ultimately, perish. Risk and reward are inextricably linked. You can't have one without the other. So, wherever you have the potential for profit (i.e. reward), you have the risk of failure. The fact that some banks were allowed to become too big to fail is a regulatory failure, and the regulators get their marching orders from Congress, which is elected by the People. It's also worth bearing in mind that the US government looks set to make a handsome profit on its "bail-outs" (many of which were actually investments into, or loans to companies, which have yielded dividend or interest returns): http://projects.propublica.org/bailout/ http://projects.propublica.org/bailout/