As the current financial crisis unfolds, the left has consistently tried to pin the blame on “deregulation” amorphously and President Bush specifically. So, for example, on the campaign trail Barack Obama blames the financial crisis on “ the Bush administration, Republican party and John McCain for pushing a culture of deregulation.”

But as powerful as President Bush is, he is not the ‘President of the World’. Europe’s banks, for example, are much more heavily regulated than their U.S. counterparts and they are often even state owned. So how are things fairing over in heavy-regulation paradise? The Washington Post reports:

In Italy, officials suspended trading in Unicredit — the country’s biggest bank, with more than $1.4 trillion in assets — after its stock price lost almost a quarter of its value. In Germany, officials fretted over the health of a subsidiary of Commerzbank as well as several state-owned regional banks that have posted heavy losses. … [In France] President Nicolas Sarkozy … was forced to negotiate a $9.2 billion emergency bailout Monday for Dexia, the troubled Franco-Belgian bank.

So what happened? Why did the awesome European regulators fail?

As European taxpayers absorbed the rapidly escalating expense of bank bailouts, lawmakers on the continent toned down their criticism of Wall Street as the origin of the problem and started to blame their own lenders for gorging on subprime loans and other risky investments.

Seems the root cause of this problem is not banking regulation at all, but bad housing loans. And we know who caused that crisis.