You're so close Dave

You correctly identify the symtoms of the disease, yet incorrectly diagnose the problem.

Greenspan's musings of his being incorrect about his personal philosophy during senate hearings on CDS markets was disingenuous at best and politically sinister at worst.

Allowing companies like AIG and JPMorgan to sell insurance contracts on bond portfolios with absolutely zero leverage limits and no ownership was not, and is not something that would be condoned or allowed in a laissez faire economy. Free markets must follow the rule of law. One of those laws and perhaps it's most important one is those concerning fraud. What AIG and JP were doing was committing fraud by selling contracts it did not have the assets to honor (in terms of proper leverage). Greenspan, Rubin, Summers, Bernanke, all allowed this to happen despite, and in the face of, explicit warnings. That is not the failure of free market capitalism or laissez faire. That, in fact, is the success of cronyism, corporatism, or corporate facism. Very close relatives to the s-word,.... socialism.

Your friend can't get credit bcause the banks are holding their assets on Fed balance sheets. Capital is not limitless. The lion's share of credit is being used by the federal government to prop up the very system it created to fail. Although, I'm sure if he talked to Dogfish or lenders at other small banks they might be more than glad to earn his business. The problem is, now that many of the culprits of the disaster have been rescued with taxpayer funds it makes it much more difficult for small market banks to compete. Sadly,....a large number of them will fail.