Applying Economics in One Lesson, it’s easy to see that the “too big to fail” government intervention is much of the problem. The derivatives trading that’s going on is at such a scale because the huge banks know they’ll be bailed out. As such, it leads to more risks being taken because the banks are playing with investor money to begin with, but ultimately if they lose it, they’ll be bailed out and it will be taxpayer money they’re losing.
The government is subsidizing the risk to save the X industry, leading to worse decisions by the banks that ultimately hurt everyone except a few specific interests. The specific bankers involved gain, who are not all bankers by any means. The politicians with the inside track or who get political benefits from the situation are getting something out of it.