There is all the regulation needed to keep banks and all other lenders from "screwing" the consumer and plenty of enforcement for rogue operators.
What cannot be done is to legislate, regulate, or adjudicate intelligence, probity, thrift, or common damn sense in consumers.
People will be stupid and act in opposition to their interest and there is nothing that can be done about it.
The Good Book also says that "the man who builds his house on the sand is a foolish man". Doesn't stop people from building houses on the beach and screaming for FEMA to insure it for them.
Great responsibility comes with power. Financial insitutions have the power to create prosperity and opportunity or financial ruin. In the past if one wants to apply for a loan to buy a house, the income and debt ratios that he/she must meet were established to protect the bank, and the stringent standards unintentionally protected the applicant from him/herself. Banks understood their responsibilities while making money. Today there are many in the financial ranks (and some in the Free Republic) think that because there are consumers that are foolish or reckless in applying for loans to buy a house, it is okay for banks to take advantage of this stupidity to make a buck by marketing these loans to them. Many of these new loans have such high debt ratios, and approximately 1/4 may face default indicates that these new products are detrimental to the society as a whole because the practice of pushing these loans on dumb consumers will cost the taxpayers and good consumers money while the lenders made their money on the points and fees and bundled the risky loans into a portfolio and sold it to a mortgage reinsurer.