Did FDA pull the pills under pressure from the big pharmaceutical companies, or were the actually concerned about our health? It would seem that if they concerned about our health they would regulate all dietary supplements both for their safety and dosage. Singling out red rice yeast supplements looks too much like caving in to industry profits. More now than ever, I am believing we have the best government money can buy.
I think what it comes down to is that the FDA regulates anything that is used to treat disease. Since supplements effects on disease is somewhat controversial and not concrete across the board, they're not regulated. In the case of red yeast rice, they found it contained lovastatin (sp?) which is basically similar to statin drugs given to treat high cholesterol - hence why red yeast rice worked so well. So, the FDA was regulating it. Apparently though some court deal overturned that, it is now allowed back on the shelf unregulated...but no longer contains lovastatin - rendering it completely useless.
So in summary, there was a good, cheap way to lower cholesterol, but the government screwed it up - quite probably due to pressure from the pharmaceutical companies who want to rule the world no matter how many of us they have to kill in the process.