In the Alchemy of Finance, George Soros offers this view on regulators:
On balance, the regulators understand the business they supervise less well than those who engage in it. The more complex and innovative that business is, the less likely that the supervisory authority can do a competent job.
Regulation always lags behind events. By the time regulators have caught up with excesses, the corrective action they insist on tends to exacerbate the situation in the opposite direction. That is what has happened in the period under study [1984-85]. By the time the authorities discovered that international lending was unsound it was too late to correct the situation because the correction would have precipitated a collapse . . .
Commercial bankers have also commited many mistakes, but at least they have an excuse; they operate within guidelines laid down by the regulators. Their job is to compete, not to worry about the soundness of the system.