Todd sometimes your assumptions are as amusing as your confusion as to how a free market actually operates.

If the Fed exerted control over Lehman or Aurora for fraudulently writing mortgage loans and fraudulently misrepresenting their value and the nature of their structure they would, in fact, be doing the job the government is prescribed to do in a free market system. The problem is they wantonly neglected to do their job. Fraud laws have existed for centuries. Failing to uphold them is not a failure of capitalism, it is the success of corporatism.

If you listen to Alan Greenspan then yes, you believe that a free market is actually anarcho-capitalism where anything goes. Greenspan is hardly a free marketeer. He was a central planner by the very nature of his job at the Federal Reserve. As I've said before his musings on free markets have been disingenuous at best and sinister at their worst.

Even your most died-in-the-wool, Libertarian, laissez-faire capitalist thinkers such as Rothbard, Mises, and Hazlitt all agreed and advocated that it is the government's job in a free market system to police fraud and uphold the sanctity of contracts.