Right. Because they can make you give them money. No, only the government does that.
They dangle their dollars over your head and you dance
The Federal Reserve's policies for one, propped up the housing bubble instead of letting it collapse when it was much smaller. This wasn't helped at all by the laws requiring lenders (at least those fed by tax money) to loan to those who were in greater risk of foreclosing. Nor by the fact that financial giants knew they would be bailed out by the government if their wild risks failed.
Once again, this money wasn't just "printed and stuffed into the economy", it was loaned through bonds. The crashed wasn't really caused by lenders being forced to lend to those that couldn't pay back so much as it was caused by a lack of regulation of the finance sector, allowing them to package up the shitty loans as securities, get the falsely rated as "AAA" by private ratings agencies, and then dump the toxic "AAA" securities on organizations like pension funds, meaning that the banks really had no risk whatsoever in taking the loans as they could disguise them as something better and sell them.
While I still don't know what to think about the bailout (More people would have lost their homes if the bailout didn't happen, but we probably should have seized the assets of the banks and bankers who caused this to cover the costs)
Don't forget that corporations are granted their status as entities by the government, and their number one legal responsibility is to their shareholders. There's also the fact that as a regulatory body financed by taxation, the government has no economic incentives to keep costs low or service quality high. Had it been a private regulatory agency in charge of overseeing the financial industry during our crisis, I guarantee you would not be calling for them to have increased power, but to be shut the fuck down.
Private ratings agencies like S&P helped enabled the finance sector to get away with what they did. I do call for all those involved to be changed or shutdown, but since they are private and not accountable to me they don't give a shit. At least with the government, I get a vote.
Also, government should not be in the business of "keeping costs low" and shouldn't need "economic incentives" to do things, it should be using all the resources it can collect from it's populace to in turn provide profit-less services beneficial to all the people as best it can - once the need for "economic incentive" is introduced to the government, the need to profit will cause them to provide services less valuable than the money people pay in taxes.
Please don't think that I'm pinning our problems on some new oversight rule that the government is imposing on the financial sector. As I explained above, a private agency would have better incentives for properly regulating, but these are the least of the government's flaws. The big ones run deep, like central banking, inflationary money supply, public schooling (I consider it a form of religious indoctrination).
So a private agency, given the choice of running an honest business and profiting a little, or pulling a grift and profiting greatly would choice to stay honest for what reasons? I believe the standard operating procedure in America is: pull a scam/do something bad, get caught, reform organization under another name so the "vote with your dollars to keep them honest" crowd will continue to unknowingly support them (if you didn't do the illegal stuff through a shell corporation).
also, lol at this:
public schooling (I consider it a form of religious indoctrination)
Public schooling exists solely for the reason that we believe that your children are people and not your property, and should therefore be given some kind of baseline, uniform and structured education so you can't deprive them of knowledge they will need to be able to function later in life by telling them they don't need any math past addition and subtraction and that science is all gobbledygook because Jesus said so when he created the world in 3000BC in October.
Please produce evidence, or at the very least a coherent argument, that this is the case.
The biggie would be http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
, which removed a bunch of post-Great Depression reforms that were introduced under Glass-Steagall and basically broke down the barriers between banks, securities agencies, insurance agencies, and ratings agencies and allowed the financial market to grow into the mess that it did.