[alexose]

> Companies have a huge intensive to stay, establish partnerships, branding, funding and so on.

Companies have huge incentives to act altruistically, but individuals within those companies sometimes have huge incentives to maximize short-term profits.

There's an asymmetry in the way companies and their employees operate. Employees can endanger the life of the company at a negligible-- or even negative-- cost to themselves. It's why banking executives might reward the opening of millions of fraudulent accounts, for example.

I've yet to see an example of a company that can completely prevent this problem. Given the lack of evidence, I have to continue to believe in regulations that protect consumers.

[nickik]

But we are living in a system of literally exploding banking regulation. The amount of regulation bank have are so astronomically high that no human can actually read it. There are huge organisations that try to enforce these regulation but for some reason this does not solve the problem.

Each time there is a issue, there is a new movement for anther Basel. This time things will be different. But they are not. For some reason many people just keep yelling 'more regulation' without any evidence that they actually do or change much.

Yes, individuals do suboptimal things for the long term of the company, but I don't see a massive amount of cases were companies get created for a short time to defraud everybody and then leave. Every company has a intensive to set up a structure so that they can prevent this sort of stuff, its in the responsibility of the owner, who has the most to lose.

Interestingly enough Adam Smith had invested in a bank that went down. In this system you had companies with double exposure. That means that if you had a stock of a failing company you could lose the value of the stock plus pay that much into the bank.

This actually had the effect that banks when failing would try to fail early, now failing banks try to make high risk investments to get everything back and then ask for bailouts if it fails.

I would highly suggest you study historical bank systems. Compare the highly regulated US banking system (US banking was highly regulated from the very beginning, usually requiring a special charter, no branching and so on) to the hardly regulated banking system of Canada. During the Great Depression the US had about 3000 bank failures, Canada had 0-1 depending on how you count. Canada during that time did not have a central bank, but rather competitive note issue by a group of banks (the US had taxed this heavily during the Civil War and reduced it, then finally getting ride of it in 1913 with the Fed).

It must also be said that Canada suffered very heavily economically, but the banking system was stable. Canada was famed for its banking system on to this day have a far superior less regulated system. In the US many people actually wanted to adopt the Canadian unregulated system, but JPMorgan and friends did of course not want to lose their monopoly on the international market (small banks had to use a partner in New York).

You can also go back to England and Scotland. Scotland probably had the freest banking system that ever existed and it was one of the best performing system that we have historical evidence of.