Because what is now a dead boring normal finance was once a complex financial structure. Almost certainly we've gone too far, but you still get idiocy like people decrying shorting, which is a very old, well understood and totally economically justifiable practice. You need to have people who understand this stuff regulating it, but then you either get regulatory capture or incompetence because if you can understand this stuff well enough to regulate it you can make a lot more in the private market.
1) Officially a lot of the stuff is there for hedging/insurance.
2) It's quite hard to regulate this stuff out of existence, because the aforementioned really smart people will find holes in your regulation.
3) The financial industry is quite powerful and can hire a lot of lobbyists that talk about "improving efficiency" by reducing red tape surrounding their industry.
4) During the good times it looks like a lot of wealth is being created and no-one wants to commit political suicide by spoiling the party.
