That is true. But the organizations that have been forced to internalize externalities have a strong desire to externalize them again. And will try to change the regulations to allow them to do so. Success is generally a question of when, not if.
As an example we averaged one credit crisis per decade for over a hundred years. Then Depression era regulations such as Glass-Steagall put an end to that for several decades. The regulations were eroded then finally removed, and a decade later we had a credit crisis. The Depression era regulations succeeded. But a later generation came to believe that the threat they were blocking was hollow, and the regulations changed.
As an example we averaged one credit crisis per decade for over a hundred years. Then Depression era regulations such as Glass-Steagall put an end to that for several decades. The regulations were eroded then finally removed, and a decade later we had a credit crisis. The Depression era regulations succeeded. But a later generation came to believe that the threat they were blocking was hollow, and the regulations changed.