Insider trading is very, very difficult to prove in a court of law, verging on the impossible.
Regulator's do what they can but they can't pre-approve every decision banks make.
Northern Rock and B&B went under, there's no almost. FSA definitely asleep on the Rock case, on B&B I'd say they knew it was coming and were powerless to do anything about it as it was too late.
Nobody has ever really spent much time on widespread systemic failure (which is what we are seeing now). Regulator's generally focus on specific institutional risks (eg rogue traders etc.).
What we are seeing now is that the whole industry went in the wrong direction.
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