Since the rumblings of the economic crisis began in 2007, Americans have suffered four years of fear, recession, and stagnation. The culprit is not free markets, but Washington policy. The problem is politicians’ and regulators’ treatment of the nation’s “too big to fail” financial industry—not just in recent years, but over nearly three decades. America [...]

Starting in the 1980s, the United States’s carefully constructed regulatory infrastructure started to decay. Unconventionally structured companies and securities escaped the regulatory system, eventually creating a shadow financial world that operated without necessary constraints. Too often, the government treated the fragile system’s occasional failures as crimes to be prosecuted and not as evidence of fissures [...]