Regulatory capture is a theory associated with George Stigler, a Nobel laureate economist. It is the process by which regulatory agencies eventually come to be dominated by the very industries they were charged with regulating. Regulatory capture happens when a regulatory agency, formed to act in the public's interest, eventually acts in ways that benefit the industry it is supposed to be regulating, rather than the public.
Senator Elizabeth Warren is a critic of regulatory capture. No surprise there.
But though the term will likely be omitted, (click here) an eye-opening new report released this morning by the nonpartisan Project on Government Oversight shows that regulatory capture has become far and away the biggest problem facing the SEC. And because the financial industry is now so immense, that means regulatory capture at the SEC is also one of the biggest threats facing the American economy at large.
One of the critics of Mary Joe White, Former New York Governor and Attorney General Eliot Spitzer, stated it is a bit difficult to detail how her management at the SEC will transpire. His reason for saying that is due to her time representing the private sector, namely JP Morgan, Kenneth Lewis of Bank of America and John Mack of Morgan Stanley. In other words, will her reading of the SEC decisions be based in leanings toward the industry or not.
To understand how the public can come to understand the decisions of the SEC under Mary Joe White is to follow the leadership of Senator Warren.
I believe the understanding of Regulatory Capture in relation to the decisions of the SEC will be a guide to take ownership of those decisions by the electorate. It will certainly be a focus of Senator Warren and the legislation she will propose.
Her confirmation hearings are Mid-March, they should prove to be interesting and insightful to how the Senate views her time at the SEC.
The SEC has exempted certain senior employees from a “cooling off period”...Not surprisingly, this corruption has intensified thanks, in part, to loopholes in laws that permit such exemptions, redactions and ethics waivers. Ultimately, that has resulted in the SEC becoming a textbook example of regulatory capture — and that comes with a price. As the POGO report documents, the revolving door culture is decisively shaping SEC enforcement actions — or lack thereof.
Regulatory Capture is corruption. It should not exist.
...the past two decades “the agency has been systematically destroying records of its preliminary investigations” thus keeping “an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG.”
This reference is in regard to employees of the SEC becoming employees of the companies they regulated at the SEC. I realize destroyed records are significant. That is not the point. The point is that if there are records missing from past proceedings regarding fraud, etc., that could work to benefit of the American people. Not that there are former SEC employees now working for those they regulated (a reason to go easy on those regulated to obtain a high paying job), but, it removes a lot precedent. There is literally a return to baseline of the understanding of the law. The missing files, while corrupt, can no longer act to 'drive' decision making from the Bush years. Regulation and legislation will be important to set the NEW STANDARDS. Senator Warren has her work cut out for herself in Congress.
Senator Elizabeth Warren is a critic of regulatory capture. No surprise there.
But though the term will likely be omitted, (click here) an eye-opening new report released this morning by the nonpartisan Project on Government Oversight shows that regulatory capture has become far and away the biggest problem facing the SEC. And because the financial industry is now so immense, that means regulatory capture at the SEC is also one of the biggest threats facing the American economy at large.
One of the critics of Mary Joe White, Former New York Governor and Attorney General Eliot Spitzer, stated it is a bit difficult to detail how her management at the SEC will transpire. His reason for saying that is due to her time representing the private sector, namely JP Morgan, Kenneth Lewis of Bank of America and John Mack of Morgan Stanley. In other words, will her reading of the SEC decisions be based in leanings toward the industry or not.
To understand how the public can come to understand the decisions of the SEC under Mary Joe White is to follow the leadership of Senator Warren.
I believe the understanding of Regulatory Capture in relation to the decisions of the SEC will be a guide to take ownership of those decisions by the electorate. It will certainly be a focus of Senator Warren and the legislation she will propose.
Her confirmation hearings are Mid-March, they should prove to be interesting and insightful to how the Senate views her time at the SEC.
The SEC has exempted certain senior employees from a “cooling off period”...Not surprisingly, this corruption has intensified thanks, in part, to loopholes in laws that permit such exemptions, redactions and ethics waivers. Ultimately, that has resulted in the SEC becoming a textbook example of regulatory capture — and that comes with a price. As the POGO report documents, the revolving door culture is decisively shaping SEC enforcement actions — or lack thereof.
Regulatory Capture is corruption. It should not exist.
...the past two decades “the agency has been systematically destroying records of its preliminary investigations” thus keeping “an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG.”
This reference is in regard to employees of the SEC becoming employees of the companies they regulated at the SEC. I realize destroyed records are significant. That is not the point. The point is that if there are records missing from past proceedings regarding fraud, etc., that could work to benefit of the American people. Not that there are former SEC employees now working for those they regulated (a reason to go easy on those regulated to obtain a high paying job), but, it removes a lot precedent. There is literally a return to baseline of the understanding of the law. The missing files, while corrupt, can no longer act to 'drive' decision making from the Bush years. Regulation and legislation will be important to set the NEW STANDARDS. Senator Warren has her work cut out for herself in Congress.
