How Government Props Up Big Finance

From RealClearMarkets.com:

While there is no objective size the financial industry should be, it is fair to say it would never have become this large without the crony capitalist system that has masqueraded as a free market.

In the process, the financial industry has absorbed resources that could better be used elsewhere while imposing large, systemic risks on the economy...

Big finance has achieved its present girth on the back of numerous policy decisions - some going back centuries. Many of these policies had the intention of protecting the general public, but often had the unintended consequence of enriching bankers beyond the product of their labor.

... protections and hidden subsidies have enabled the financial industry to achieve enormous size and profitability, while placing the overall economy at great risk.

Usually, these protections were accompanied by regulations such as capital requirements or size restrictions. These regulations usually failed to achieve their intended results - especially over the long term - because financial institutions are able to wear down the restrictions by lobbying and by hiring away key regulators.

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Link: http://www.realclearmarkets.com/articles/2011/11/22/how_government_props_up_big_finance_99381.html