>recent bank failures are a result of the free market running amuck on easy credit and dumb investments (home loans without income verifications)
Easy credit was the deliberate goal of the federal government starting in the early 2000's. There was a very mild recession and the government pulled out all the stops to prevent it from getting worse by subsidizing borrowing to keep interest rates well below free market levels. They killed a fly with a cannon and spawned a giant financial bubble.
In the free market, people that lend money have the incentive to make sure it gets paid back. This calculus becomes complicated when the subjective factor of the government's whims for the credit market is added in.
As far as "dumb investments" go, loans to homeowners were made in the environment of an unprecedented price bubble that was spawned by the loose monetary policy of the federal government. Many "dumb" mortgages are not dumb to make when the value of the underlying collateral is increasing by 30% every year.
I know it is the standard line that we need more regulation, but I don't see how any regulator could have been more inclined to make good decisions in such unprecedented circumstances than the market. In hindsight it is easy to say that the Government should have restricted the supply of mortgages, but this is directly the opposite its goals to increase home ownership. Personally, I wish they would stick to the goal of protecting our rights and property and butt out of everything else.
>The 30s were a lot less regulated and the great depression was a result of a free market moving without any government oversight or interference
I know this is the standard line, but many government actions worsened the Great Depression in the United States and compounded its misery. The two major monetary events of the Great Depression were directly caused by the government - 1) the contraction of the money supply and 2) massive bank failures. 1) was the policy of our wonderful omniscient technocrats at the Federal Reserve and 2) was the result of unitary branching laws and other laws meant to punish "big banks" and prevent them from forming. Anti-bank populism is nothing new in the United States. I don't have the numbers on me, but I seem to remember that the United States (with many anti-bank laws) had thousands of bank failures while Canada (with few such laws) had like 4. The fact is, "big banks" weather hard times easier, and restricting capital flows in the industry make misery for all when unexpected events happen.
On top of that, the government acted to institute a price-floor for labor at a time when prices in general were falling, thereby creating massive unemployment. In an attempt to remedy the deflation caused by monetary restriction, the government burnt food and passed a massive tariff which ended up restricting the supply of consumer goods and food.
The general problem was a fall in the price level. In the Free Market, the price of labor would have fallen to match other goods and business as normal would have resumed. However, the government decided restrict the supply of labor and other goods, like food, to increase the prices of these goods. They succeeded in this, but they did not drive up the general price level. Instead, they increased the price of these goods relative to everything else, causing shortages in both (unemployment and food shortage). Then the government instituted more programs to fix the problems it had caused, including massive government hiring programs, subsidies, and a war. Noone suggests to this day that maybe they shouldn't have gotten their grubby little ignorant fingers so deep into the economy in the first place.
I am not an expert in the Great Depression, just an interested amateur. Still, it is obvious from a cursory glance at the facts that explaining it as a morality tale on the failure of Free Markets is much too simple, although that is the common interpretation taught to High School students. It hurts me to hear the President who presided over the longest, deepest, and most painful depression in US history credited only with "ending it".