How wasn’t deregulation the cause, if the lack of oversight allowed such investments to enter into toxic assets? Thus becoming a systematic risk?
How could the banks of known what they were doing?
Deregulation allowed the banks to operate as they pleased; however, it was the implicit guarantee that they’d be bailed out that caused so much of the stupidity(ie, privatized profits and socialized losses).
Well, firstly it’s systemic not systematic 
Credit expansion, which is largely under the control and discretion of the various central banks, caused the financial crisis. Too much money sought out increasingly marginal investment opprtunities. It was inevitable that there would be widespread malinvestment and eventaul purging. It is a classic validation of the Austrian Theory of the Business Cycle. You shopuld looks up Hayek’s work on this in particular. Or just give it a quick wiki
Because the banks weren’t derregulated, they were re regulated. More specifically a small portion of glass steagle was changed. If you’re playing monopoly and someone changes the rules to say you can now determine your own rents, that’s a far cry from simply getting rid of the rules. FDIC was still in place. The implicit bail out guarantee for Fanny and Freddie were still in place. The Fed was still in place, along with the myriad of pages of regulations which either weren’t repealed and even expanded.
If that is true, then it seems like people are mistaken.
Normally a property owner/capitalist is responsible for regulating his business since he must assume the risk of losses. But if the government eliminates risk using various forms of privileges, then obviously the government must step in to regulate these privileges in order to avoid total collapse.
Interventionism leads to more interventionism and eventually full socialism.
Yes of course the problem is always because some incompetent bureaucrat did not monitor some transaction. Maybe we could clone regulators for everything! We could have a huge clone army of them to oversee it all and make sure the economy runs as smooth as the soviet union.
Let me ask you a question, who is responsible for their investment? If a bank made a bad investment and you bought it on the wink and handshake of an investment banker why is that not the bank and your fault? Maybe because it is. The SECC should be abolished because it does nothing but give incompetent investors someone to blame for their stupidity.
Now please read…
Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse
It will answer all your questions.
I am new to a lot of this but along with the bailouts creating safety nets for individuals and groups I also believe that the fed had a lot to do with it by manipulating interest rates. I believe in 2002 they lowered the federal funds rate around 5 percentage points then raised in it 2004 or 2005. Sorry my dates are not precise because I did a study on this about 6 months ago but I believe that with the rates in which institutions loan to each other being manipulated to a lower rate then a free market would allow it to, it created a false incentive to loan out more money then an institution would have done without such manipulation.
Was going to reply with something like xahrx’s answer, so I’ll not repeat. I’ll also second the recommendation for Meltdown, this is exactly the topic that the book was written for, just read that and you’ll get it.
You shouldn’t even be posting in this forum unless you have a faint idea of the slant that we would have on business cycles. It seems like you somehow got to this forum by skipping the main site altogether.