It is a matter of "less dysfunctional with regulation" as opposed to not being dysfunctional with regulation unfortunately.

There are a lot of legitimate things to complain about with banking and its regulations but despite the many misconduct scandals in banking they are still better than unregulated parabanks. The scandals haven't been in the form of "and the head ran off with all of the money and nobody can find it or them".

Regulations certainly could be improved in multiple directions but dysfunction is not a binary.