Partly in recognition of the fact that financial organizations are managed on a consolidated basis, financial markets generally view them as single economic entities. Thus, troubles in the nongovernment-regulated portion of a bank holding company cannot be expected to leave the government-regulated subsidiaries unscathed.
There is a joke that if something works in practice, economists run to see if it works in theory. Actually, I don’t see the joke; that is indeed the way it should be. Karl Popper, by far the most influential philosopher of science of the twentieth century, propounded that a good theory is one that gives rise to falsifiable hypotheses.