Here we go. Bill Thomas is offering a very silly analogy between the automobile and the financial system. Both were simple 40 years ago, then both got complicated, and now when you need a very sophisticated specialist to fix problems with either cars or finance.
Nice story. Except the financial markets got complicated not only to provide more useful, tailored services, but also to inject confusion into the marketplace, and allow architects of new products to charge higher prices. Whether you believe what Goldman Sachs did with its Abacus deal was criminal fraud or not, they clearly devised a complicated financial instrument and confused their own clients with it, and set up those clients for a fall.
Obama, Geithner and Summers like to tell a similar story to the one Thomas is telling about how innovation in the financial system simply outpaced regulators. This kind of story completely ignores the deregulatory movement of the past 30 years, a movement in which Thomas, Summers and Geithner were all eager participants. It is not that our regulatory architecture became outdate, but rather that it was systematically dismantled.