Business: Why does the finance department have to prepare budgets for other departments

I would imagine it's for consistency's sake.

Also, there are many federal regulations that must be followed that usually only the finance department is versed well enough in.

Well it doesn't. In many companies I have worked they were notified what the budget would be.

That being said, there are benefits to having them participate in this process. Somebody needs to fight to keep the budgets down, as each department would likely want more than the company should realistically spend. And each department often has no visibility into what the company should really be spending. So the finance department needs to be on top of revenue and projections and make sure that the cash flow supports the budgets that the individual departments want.

Usually the finance department is really where all of these concerns consolidate but this isn't the only way to do it.