Where government regulation works well is where it enforces transparency and punishes fraud.


Where it fails is when it rewards inefficency and/or tries to micromanage or force businesses to act in ways that are inherently at odds with sound business practices (ex: forcing them to lend to people who can't afford to pay it back).

As near as I can tell, the bailout was compunding the bad by rewarding inefficiencies that the government pushed for.