It is still the case that certain markets in the world are so important (and the US is one of these in various financial transactions) that regulations there actually filter out to the rest of the system.

Yes, there will be loopholes and yes some people will avoid compliance by moving operations to the Cayman islands. In the end however, a first step to stabilising the system is regulating the activities of savings banks, most of whom do sit in a geographical position they cannot escape.

Now I know you have no interest in measures to stabilise a system you believe to be doomed, but that's a separate issue.