"That's when i started to see the social implications," he said "If you are going to start a regulatory regime from scratch, you'd design it to protect middle and lower-middle income people, because the opportunity for them to get ripped off was so high.  Instead what we had was a regime where those were the people who were protected the least", in: Michael Lewis, The Big Short
If states cannot let banks fails, as it would be 'inconceivable' to take the risk that they bring down the banking system of a state, how can any state ever hope to control their potential excesses?  This is more than moral hazard there is no big picture imperative to protect society from excessive risk taking of financial institutions.  When this is compounded by an ideological stance which is deeply committed to 'regulation light', how then can societies prevent low and middle income households getting exploited, and then having to fund the socialisation of bank losses, in order to 'protect' the integrity of the system which exploited them in the first place?

How can a government determined to protect lower and middle income families design a system of financial regulation that works?