If this second view is right then regulators have failed. They will have to change the rules to try to eliminate the conflicts that imperil the financial system.

This is, IMO, one of the most dangerous memes and it needs serious debunking.

The implication is that regulators were "asleep at the wheel" and "failed us."

The reality is that regulators were handcuffed by lobbying and pernicious propaganda from free-market ideology economists and politicians, whose stated aim was to eventually end regulation altogether.

So, yes, regulators have been imperfect, but the blame lies with those who sought to undermine regulation in the first place. Some of those people were in fact regulators (e.g. Greenspan) but we should never lose sight of the fact that this is a disaster bred at Cato and the "Adam Smith Institute."

[To tie it to another meme, the anti-regulation people thought only of the efficiency of the market, never the robustness or resilience.]