Risk vs Regulation

The objective is (or ought to be) preventing banks (and their ilk like brokerage houses) from losing wads of money and kicking off Great Depression 3.0.  The way a bank looses money is to make bad loans that default and don't pay off. 
    Democrats think you prevent this by setting up federal bureaucrats to watch the banks, check their books, and meddle in their deal making.  Hence the Sarbanes Oxley law and the Dodd Frank law.   Many think the terrible economy during the Obama adminstration was caused by these two laws. 
   I think you prevent undue risk taking by banks by insuring that the bankers who lead their banks into disaster should be made to smart for it.  First we make very very clear that Uncle Sam will never ever bailout any failing bank.  If we have any bank "too big to fail"  it's time for anti trust action to break that bank up into smaller parts.   Bankers need to know that if they screw up, they are out of business, right then and there.  Bank officers loose their pensions, and deferred compensation, and their company health insurance. FDIC can pay off the depositors, but bank investors, officers, employees, and stock holders loose everything.  Which ought to produce some pressure on the suits to avoid stupid plays, like Greek loans.  Or mortgage backed securities, or credit default swaps.  And we encourage every blood sucking lawyer in the land to sue the management of failed banks for gross negligence.