Bad money drives out good.
(When a government or central bank overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation, while the overvalued money will flood into circulation)
The longer the boom of inflationary bank credit continues, the greater the scope of malinvestments in capital goods, and the greater the need for liquidation of these unsound investments. When the credit expansion stops, reverses, or even significantly slows down, the malinvestments are revealed.
Enron is another good example. It was probably regulated by more agencies than any company in existence and yet it created a gigantic mess that was never noticed by regulators, but had to be uncovered by a single independent financial analyst. The truth is that regulation instills confidence in the public so that they let down their guard and makes them less cautious while at the same time distorting the competitive nature of firms in the marketplace.