By then it was too late. What ended any chance of reasonable regulation were the bipartisan legislation in 1999 and 2000, signed by Clinton, to repeal Glass-Steagal and to override state laws on gambling on securities. The latter meant that, effectively, I could buy insurance on your house and collect if it burned down. Further the insurance company could sell its side of the contract to someone who may or may not pay me if your house burned down (I would have no say in that sale). Further, I could sell my part of the insurance contract to whoever I wanted to (your other neighbor who hates your guts and likes to play with matches).
Bottom line, the financial market was turned into a casino with many players (hedgies, Europeans, our own investment banks) betting on the failure of (in essence) each other.
What you are naming is the inherent impossibility of managing financial markets. Highly regulated markets still have crooks who game the system to their favor.
Regulatory bureaucrats are forever playing catch up to predatory and nimble crooks.
Or did financial fraud not exist until now?