"...either introduced or left unchecked destabilizing activities."

I think the former would be "too much" and the latter would be "too little", although I realize that's something of an oversimplification.

relative to the american banks, canadian banks are heavily regulated. 

This is the result:

"A new ranking by Bloomberg News puts four Canadian banks among North American's top 10 as measured by assets, with Royal Bank of Canada in seventh place."     My bank went from 57th to the top ten over the course of the year.

"Canada’s six largest banks made money in the latest quarter while big U.S. banks such as Citigroup, Wells Fargo and Bank of America lost billions, Bloomberg said Tuesday in a report on its website. "Canadian banks have remained profitable, outperforming their peers, because of tighter government restrictions on lending and capital requirements," it said."

http://www.cbc.ca/money/story/2009/03/17/canada-banks.html?ref=rss

That's exactly what I intended by those statements actually.  I'm not saying that the over or under regulation doesn't exist, just that it's an unnecessary and problematic clashing of ideology.  I might be wrong I suppose, I am certainly making the assumption that both sides view simple effective regulations to be preferable to complicated effective regulations and that either of those are preferable to ineffective regulations of any kind.

My real point is that I object to the idea that we go into the process of finding a solution to the problem with a preset notion of what we want the solution to look like based on our ideology. I think the ideology is itself part of the problem, it's pretty hard to honestly identify legitimately unstable factors that need to be eliminated when one side is aiming for a white list and the other side wants nothing at all (both being the extreme examples).

The problem I see is that. The government likes to make laws and then fail to work it.

It's easy to make laws. It's hard to upkeep.

Well I certainly sympathize with that, but on the other hand when something like this goes this wrong it is going to be one or the other (or both) and I think by this time we ought to be able to form opinions on which it is based of what went wrong and in what way it did. 
Then again, I think we ought to be able to form MY opinion