Also worth noting. JP Dimon said that the reason they were unaware of the risks they were taking is because they were MISINFORMED.

He didn't think regulations would do much in this case, since JP Morgan passed on the Misinformation that they were given. Meaning basically no regulation would be able to stop what looked like a reasonable trade based on said information.

Politicans or regular people?

Regular people it's because they're too busy trying to back up what their politicians say.

Politicians, it's because the Democrats have done a good job deflecting the fact that most of the big "Bank corruption" probes in congress have involved democrats by exploiting republicans distaste for aproving added layers of legislation nobody really knows what it means because it hasn't even all be written out yet.

That was the funniest part of Dodd-Frank.  It was passed before all the laws within it were even written and before anybody knew how it would work.

Ok, this is a good place to levelset with things.  As I believe I wrote before "less regulations" can mean streamlining the rules or reducing enforcement.  The typical thing that happens it ends up with less enforcement, and that is the norm.  No attempt to streamline to make better is done, but usually done so that people can take greater risks and game the system more and not be blocked.   As someone who does game design, I can tell you, that it is NOT a good idea to merely add rules to a game, and expect it to get better results.  I would agree with you on having less rules, more strictly enforced.  Except this isn't what the industry seems to want.  Big business seems to LOVE a big convoluted mess of rules they can game and hide in, and to reduce enforcement.   They know that congress folk will pass more and more laws and turn to them to write it.  It is a big lousy racket set up.

And with corporations, there is a disconnect between management and owners (shareholders), across industries on the whole.  And this is a problem. Management will continue to take stupid risks and leave the shareholders holding the bag.  They earn big bonuses this way, which is why you have risks.  And they will gut things to maximize profits.  You can look to the rise and fall of Carly Fiorina as a prime example of that.  She proceeded to kill the culture that made HP successful, maxed out profits short term, ran the company into the ground, and left with a nice severance package to boot.  

http://www.businessweek.com/news/2012-06-13/dimon-says-jpmorgan-managers-may-have-misinformed-board-on-risk 

This article says that JP Morgan's management ended up misinforming everyone.  Yes, gross incompetence at the bottom.  Either that or was for deceptive reasons.

That's the exact problem. Politicians (Dems, mostly) always talk a lot about how we need to really stick it to the fat cats with a bunch of stiff regulations. This appeals to a certain audience, but it's the exact opposite of how regulations actually work. The big guys will always have an easier time complying with regulations, which gives them an unfair edge over their small competitors (the guys politicians always claim to be fighting for), and it's almost invariably the big guys who are invited in to help write the very regulations we're supposed to be "slapping" them with. That's exactly what happened when the EPA decided to start regulating trucking emissions. The American Trucking Association was all for it, especially after they had a hand in crafting the things, and it was only the small independents who raised a fuss.

And, as you say, it's exacerbated by the fact that when you have too many rules, you basically have no rules at all since you only have a limited amount of resources for enforcement. Once there's a culture of letting some stuff slide, pretty much everything slides until you want to go after someone for personal or political reasons.

The thing is that passing laws is the only thing congress can do.  Well, they have other roles, such as shuffling money around, and theoretically declaring war (they no longer really do this).  But it is throw more rules on the book, and tell your constituents that you did something about it.  And then, nothing is every looked at, at all, and the rules pile up.

There is also probably a political angle to it, or for ways for the powers that be to take people out they don't like also.  In this, have enough things so you can bust someone, somehow, for some reason, and take them out on this or that.  On a local level, law enforcement probably pushes to have vice laws on the book,because then there is a political push for quotas to meet by police officers.  So, you have this vice and that, like prostitution, so they can show they get their arrests. 

Ideally, problems of society would be tackled, but it seems like more things are a game that people game and try to make a buck off, rather than actually solve anything.  

Bonus points if someone can find the clip of Milton Friedman in front of a bunch of laws in Washington, talking how big the rules have gotten and how more and more got past.  I can't seem to find it.  I also know someone did a documentary on how congress doesn't read the rules they pass.  Bonus points for finding that also.

Heck half the time the rules aren't even written when passed, like Dodd Frank.

Though like I said, it could all be solved by progressive regulations.  (well not all, but it'd sure make a hell of a lot more sense.)