Yesterday, HBOS and Lloyds were locked in merger talks. Apparently they were "nudged" by Gordon Brown, the Financial Services Authority and the Treasury. These events followed rapidly after the collapse of Lehman Brothers.
At least we have reined back from the dangerous precedent of Fannie Mae and Freddie Mac, where the US government seemed to be developing a giant welfare state for bankers. But, nevertheless, there are growing calls for more regulation: is this the end of our liberal, capitalist financial system?
In fact, we already have an extensively regulated financial system. Freddie Mac and Fannie Mae had well over 200 regulators all to themselves.
In the UK, the FSA has frighteningly wide powers. Arguably, the very financial instruments that have caused recent problems - securitised mortgages - have been designed to avoid the inflexible regulation of the traditional banking sector. The more the regulators regulate, the more the whizz kids put their efforts into designing more complex products.
There are two further salutary lessons for those who believe that more regulation is the answer to our problems. As Eamonn Butler from the Adam Smith Institute has noted, US banks were forced by regulation to make loans to people who had poor repayment histories.