A problem is when those big businesses prevent other smaller businesses from catering to the niche markets, through lobbying or other anti-competitive means.
Then combat the lobbying or other anti-competitive antics. The last time we tried to force business to operate in the wrong market, we told banks to lower their lending criteria and look where that got us.
> we told banks to lower their lending criteria and look where that got us
There's definitely a mix of opinions out there on this, but there have been some good challenges against community lending targets as a significant cause of the crisis.
Wikipedia can sometimes provide a pretty good record on controversial topics with sufficient visibility.
The current article on causes of the US housing bubble, and specifically the section covering loan policy, cites useful literature on both sides. While it's not a completely one-sided argument, it appears the weight of the evidence goes against the CRA and similar government initiatives as a leading cause of the crisis:
http://en.wikipedia.org/wiki/Causes_of_the_United_States_hou...
At the very least, given the number of other sections on that page, you should conclude that the CRA wasn't the sole cause of the crisis.
Note from the same page, (and in some of the above polemics), it seems like there's a similar cry to blame deregulation for the crisis. There are reputable economists, even Bill Clinton claiming that the repeal of Glass-Steagall probably wasn't sufficient to cause the crisis. Regulation and deregulation make suggestively convenient bogeymen for the right and left respectively, so they should draw a sort of heightened scrutiny.
Events like this are naturally complex. Alarm bells should ring if anyone boils down the entire crisis to something so simplistic as "too much or too little government." Some problems and some solutions don't fit conveniently on a postcard.
