This wasn't government arranging favors for large, well-connected businesses. It was large, well-connected businesses arranging favors for each other, at the expense of everyone else. What's happening now is the government putting a stop to it.
You may believe that there's some alternative to government regulation that would prevent this sort of thing happening --- but to date, that's what's worked most effectively, and Rand & co. would take it away.
I think that Rand is an excellent writer and she does have interesting, if idealistic, ideas. That said I have not drank the Rand cool aid. For example, the idea of totally dismantling the EPA (current republican political plank) grosses me out. Also, one of the few valid functions of government is to enforce a small set of laws. Remember that 50K new government regulations were created in 8 years of W. Bush and I am confident that it will be as bad at the end of the Obama administration. There really are no absolutes: different philosophies all have their own strengths and weaknesses, but in different ratios :-)
You may believe that there's some alternative to government regulation that would prevent this sort of thing happening --- but to date, that's what's worked most effectively, and Rand & co. would take it away.