Jamie Dimon, head of JPMorgan Chase, argues against regulation because, according to him, it lumps in good bankers with bad bankers. For example, via Maureen Dowd,
After the economy nearly atomized in a cloud of cupidity, Dimon became known as America’s least-hated banker. But now the blunt 56-year-old Queens native who snowed Democrats in Washington with all his talk about not lumping in “good banks” with “bad banks” has fallen off his pedestal.
For us humble outsiders, it is hard to tell a good banker from a bad banker, particularly when even good bankers can’t catch a “whale”. This generates Gresham’s Law of Bankers – bad bankers adversely affect good bankers. If I am not sure if I am employing the services of a good banker or a bad banker, I am going to make transactions under an expected quality of banker. Then good bankers suffer as they are pooled with bad bankers.
Screening out the bad bankers via regulation can help the good bankers by creating separation.
Cheap Talk 
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May 22, 2012 at 1:50 pm
Angry Dude
Some industries develop self-cleansing mechanisms, such as medicine, which do a good job of eradicating under performers. Other industries do a good job keeping out the idiots with a combo of fed and private sector regulation, aviators for example. And some industries just suck, eg financial regulation. Perhaps you can explain why the differences?
If I had to guess, it has to do with pride of craft and liability. Those industries populated by craftsmen (md, pilot) have a desire to self regulate. And can tell an idiot in their midst. Those industries unconcerned w craft, such as those driven solely by $$, will never self regulate. Nor will an outsider be able to regulate them (gov). The lack of consequence in the form of liability is not a deterrent either.
May 22, 2012 at 2:42 pm
Sandeep Baliga
Self regulation has a number of obvious issues. In my simple story, the bad bankers can influence self regulation and then it is toothless. The other issue is that self regulation can be designed to deliberately create market power, raise entry barriers etc. My colleagues Kathleen Hagerty and Mike Fishman have papers along these lines.
Of course, the same issues can impact regulation via lobbying etc.
But I do not have a better answer than you yourself pose for why some industries manage to self regulate and others do not. Nice point.
May 22, 2012 at 6:18 pm
Robin Trenbath
It does seem a little odd to suggest that regulation would lump good banks and bad banks together –– almost akin to arguing that criminal law lumps good citizens and bad citizens together…
May 22, 2012 at 6:28 pm
Emil
Indeed, murder laws also pool normal people with psychopathic serial killers.
May 22, 2012 at 6:43 pm
Robin Trenbath
I guess the difference between good and bad bankers, and good and bad citizens, is that typically the bad citizens, when caught, get punished.
May 23, 2012 at 2:39 am
Robin Trenbath
Maybe somebody should send him this: http://yourlogicalfallacyis.com/composition-division
May 31, 2012 at 1:06 pm
JoshK
And how would this regulation separate out good and bad bankers? Seems like it would separate out good and bad lobying organziations.