We also had savings and loan scandal and many banks failed after a period of lighter regulation. We do need regulatione even in a free market (not that this ever existed). This much is obvious. I think we should go back to the old days and not allow banks to get involved in investment-too much risk.
what happened was, FDIC limits were raised from $40,000 to $100,000 and that govt protection gave banks an incentive to take on more risk. So yes there were bad incentives and bailouts in those days too and S&L was a big problem.
The difference with freddie mac and why it was much worse is that the whole point was for them to profit by seeking risky borrowers.
Yes, we do. As little as possible. But what we've gotten over the years instead is corrupt and/or incompetent government drones who did not do their jobs. As a result and is as so typical with government, they then made even more laws that were never fully enforced. Lather, rinse, repeat.
I really don't know the answer to this aside from the unlikely sight of the lifeless bodies of the corrupt hanging as examples from DC lamp posts.