Regulation isn’t an obstacle to thriving free markets; it’s a vital part of them.
That's the conclusion of a small item in the New Yorker that talks about regulatory failure in the light of the oil spill. Picking up the other elements of insurance and finance, the article describes two kinds of regulatory failure. One is the traditional regulatory capture, the other is political appointments by an anti-regulation Government (the Bush strategy was to not repeal regulation just to appoint regulators who wouldn't do the job or defund the agency as outlined in The Wrecking Crew).
This results in the worst outcome;
Too little supervision encouraged corporate recklessness, while the existence of these agencies encouraged public complacency.