Turns out regulators knew about LIBOR fixing and did nothing. My guess is that they probably encouraged it (actually, they DID encourage it…by doing nothing).
This is a key problem with regulation: it makes bad problems worse; it masks problems; it encourages problems. Monopolies, price fixing, collusion – these bad things can only happen when the law (regulators, legislation, law enforcement, etc) is implicitly or explicitly helping companies avoid free market competition. Monopolies can only exist with the help of the government. Open markets self-correct because of competition, failures, and successes.
And NO: there is no person, no institution, no set of rules that can be put into place that are incorruptible, omniscient, infallible. Dispersed, de-centralized knowledge (that is, an open market) is the only way to prevent big, bad things from happening.