4 ms·

oh man even worse this guy used to work in regulation for the government as part of the Consumer Financial Protection Bureau. Such a clear case of "regulatory c

by Top19 9y ago

oh man even worse this guy used to work in regulation for the government as part of the Consumer Financial Protection Bureau. Such a clear case of "regulatory capture", or the process where former employees of regulatory agencies leave to go reveal all their thinking and decision making tactics to the highest bidder.

amluto 9y ago
That's not really what regulatory capture means...
- Top19 9y ago
  Would you say it's part of the process though?
  - LeifCarrotson 9y ago
    No,the problem is not that they reveal anything about what they were thinking. That's pretty much public knowledge, and doesn't need protection. It's that they modify their thinking and their actions while in the regulatory agency in ways that benefit the business interests, in exchange for a cushy job after their time in office. Or the reverse, that they originate from the businesses and go to the agency to implement the business policies.
- c3534l 9y ago
  Regulatory capture is when regulators later join the people they were regulating This compromises their ability to regulate because they anticipate working that industry later. David Stein used to regulate the financial industry. Now he works in it. That's exactly what regulatory capture is.
  - acjohnson55 9y ago
    I'd say that that's a mechanism of regulatory capture, but not the phenomenon, itself. As Wikipedia puts it: "Regulatory capture is a form of government failure that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating." There are many ways this happens without a revolving door.
    - jacquesm 9y ago
      IE, the EPA at the moment.
    - vermontdevil 9y ago
      Yep look at hairdressing, taxi, funeral homes industries for examples.
      - jnbiche 9y ago
        And banking, for another example.
  - tacomonstrous 9y ago
    What you've described is the revolving door, which is logically disjoint from regulatory capture.
ethan_g 9y ago
To be clear, regulatory capture is when the regulator advances the interests of the industry rather than of the public. Revolving door is a separate issue. There's an interesting argument that the revolving door actually prevents regulatory capture through encouraging regulators to be more strict. The idea is that the more onerous the regulations, the more desireable it is for corporations to hire former regulators who know the system. "Keep your friends close, and your enemies closer." Matt Levine's take on it: https://www.bloomberg.com/view/articles/2014-06-26/strict-regulation-makes-the-revolving-door-spin-faster https://www.bloomberg.com/view/articles/2014-06-26/strict-re...
- willvarfar 9y ago
  The problem with civil servants taking high paid jobs when they leave is that it can be a payoff for being biased for the company. If companies can dangle the carrot of an eventual job the civil servant will avoid actions that sink their chances. There's a lot of stuff on real revolving doors in the UK in the magazine Private Eye. Stomach turning really.
  - anigbrowl 9y ago
    Nobody is arguing in favor of the revolving door, they're just pointing out how it differs from regulatory capture. Don't argue for the sake of argument.
- michaelt 9y ago
  The revolving door doesn't require regulators to be more strict. All it needs is for companies to give big rewards (six figure salary for a day a month of work) to regulators who have previously done things the companies like. Then their replacements will know strengthening regulations is against their personal interests. You don't hire an ex-regulator for their expertise, you hire them as payment for services already rendered.
- joe_the_user 9y ago
  There's an interesting argument that the revolving door actually prevents regulatory capture through encouraging regulators to be more strict. So "interesting" now means is "deceptive and ingenuous". In a hypothetical world where corporations were akin to mom-and-pop bakeries that would need to hire power, sophisticated regulators to guide them through a very tough state, that argument might be plausible. In the real world where corporations are powerful, forward-looking institutions who know full well that paying people involves a process of rewarding behavior, this argument says more about the person advancing it than anything else. And sure, a lot of smart people might claim this, just as similar stable of smart people operate in the stable of the corporations writing arguments for newspapers and magazine. But maybe all those people aren't at all tainted in their views. I'm sure they could come up with hypothetical situations where they aren't.
smsm42 9y ago
> former employees of regulatory agencies leave to go reveal all their thinking and decision making tactics to the highest bidder. This implying thinking and decision making tactics of regulators should be some kind of closely guarded secret? These people are essentially writing the laws that rule our economy, I'd think if anything should be public that's their thinking and decision making tactics.
- ethan_g 9y ago
  Unfortunately, regulations are complicated, vague, and enforced unequally. And yes, sometimes they're even secret, because of fear that if their exact model is publicized, the banks will just optimize around it. "Security through obscurity", essentially. http://www.marketwatch.com/story/fed-says-stress-test-models-will-stay-a-secret-2015-06-25 http://www.marketwatch.com/story/fed-says-stress-test-models...
  - smsm42 9y ago
    > Unfortunately, regulations are complicated, vague, and enforced unequally. All true, they are. But how implying helping somebody to navigate this mess is somehow bad thing? The bad thing is complicated, vague and capriciously enforces law, not people trying to deal with it. > And yes, sometimes they're even secret, because of fear that if their exact model is publicized, the banks will just optimize around it This is the opposite of how the law should work. It's like the argument of making the laws and the courts secret because otherwise criminals would know the law and would learn how to avoid being prosecuted, and would also be able to hire lawyers for the same purpose. Yes, they are, and that's how a normal country works. The opposite is how a totalitarian police state works. Sure, it's probably harder to get away with a financial crime in North Korea - but it's also impossible to live a normal life and enjoy freedoms we all have. I'd rather let some crooks slip through now and then than turn the country into North Korea.

by Top19 9y ago

amluto 9y ago

That's not really what regulatory capture means...

Top19 9y ago
Would you say it's part of the process though?
- LeifCarrotson 9y ago
  No,the problem is not that they reveal anything about what they were thinking. That's pretty much public knowledge, and doesn't need protection. It's that they modify their thinking and their actions while in the regulatory agency in ways that benefit the business interests, in exchange for a cushy job after their time in office. Or the reverse, that they originate from the businesses and go to the agency to implement the business policies.
c3534l 9y ago
Regulatory capture is when regulators later join the people they were regulating This compromises their ability to regulate because they anticipate working that industry later. David Stein used to regulate the financial industry. Now he works in it. That's exactly what regulatory capture is.
- acjohnson55 9y ago
  I'd say that that's a mechanism of regulatory capture, but not the phenomenon, itself. As Wikipedia puts it: "Regulatory capture is a form of government failure that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating." There are many ways this happens without a revolving door.
  - jacquesm 9y ago
    IE, the EPA at the moment.
  - vermontdevil 9y ago
    Yep look at hairdressing, taxi, funeral homes industries for examples.
    - jnbiche 9y ago
      And banking, for another example.
- tacomonstrous 9y ago
  What you've described is the revolving door, which is logically disjoint from regulatory capture.

ethan_g 9y ago

To be clear, regulatory capture is when the regulator advances the interests of the industry rather than of the public. Revolving door is a separate issue. There's an interesting argument that the revolving door actually prevents regulatory capture through encouraging regulators to be more strict. The idea is that the more onerous the regulations, the more desireable it is for corporations to hire former regulators who know the system. "Keep your friends close, and your enemies closer." Matt Levine's take on it: https://www.bloomberg.com/view/articles/2014-06-26/strict-regulation-makes-the-revolving-door-spin-faster https://www.bloomberg.com/view/articles/2014-06-26/strict-re...

willvarfar 9y ago
The problem with civil servants taking high paid jobs when they leave is that it can be a payoff for being biased for the company. If companies can dangle the carrot of an eventual job the civil servant will avoid actions that sink their chances. There's a lot of stuff on real revolving doors in the UK in the magazine Private Eye. Stomach turning really.
- anigbrowl 9y ago
  Nobody is arguing in favor of the revolving door, they're just pointing out how it differs from regulatory capture. Don't argue for the sake of argument.
michaelt 9y ago
The revolving door doesn't require regulators to be more strict. All it needs is for companies to give big rewards (six figure salary for a day a month of work) to regulators who have previously done things the companies like. Then their replacements will know strengthening regulations is against their personal interests. You don't hire an ex-regulator for their expertise, you hire them as payment for services already rendered.
joe_the_user 9y ago
There's an interesting argument that the revolving door actually prevents regulatory capture through encouraging regulators to be more strict. So "interesting" now means is "deceptive and ingenuous". In a hypothetical world where corporations were akin to mom-and-pop bakeries that would need to hire power, sophisticated regulators to guide them through a very tough state, that argument might be plausible. In the real world where corporations are powerful, forward-looking institutions who know full well that paying people involves a process of rewarding behavior, this argument says more about the person advancing it than anything else. And sure, a lot of smart people might claim this, just as similar stable of smart people operate in the stable of the corporations writing arguments for newspapers and magazine. But maybe all those people aren't at all tainted in their views. I'm sure they could come up with hypothetical situations where they aren't.

smsm42 9y ago

> former employees of regulatory agencies leave to go reveal all their thinking and decision making tactics to the highest bidder. This implying thinking and decision making tactics of regulators should be some kind of closely guarded secret? These people are essentially writing the laws that rule our economy, I'd think if anything should be public that's their thinking and decision making tactics.

ethan_g 9y ago
Unfortunately, regulations are complicated, vague, and enforced unequally. And yes, sometimes they're even secret, because of fear that if their exact model is publicized, the banks will just optimize around it. "Security through obscurity", essentially. http://www.marketwatch.com/story/fed-says-stress-test-models-will-stay-a-secret-2015-06-25 http://www.marketwatch.com/story/fed-says-stress-test-models...
- smsm42 9y ago
  > Unfortunately, regulations are complicated, vague, and enforced unequally. All true, they are. But how implying helping somebody to navigate this mess is somehow bad thing? The bad thing is complicated, vague and capriciously enforces law, not people trying to deal with it. > And yes, sometimes they're even secret, because of fear that if their exact model is publicized, the banks will just optimize around it This is the opposite of how the law should work. It's like the argument of making the laws and the courts secret because otherwise criminals would know the law and would learn how to avoid being prosecuted, and would also be able to hire lawyers for the same purpose. Yes, they are, and that's how a normal country works. The opposite is how a totalitarian police state works. Sure, it's probably harder to get away with a financial crime in North Korea - but it's also impossible to live a normal life and enjoy freedoms we all have. I'd rather let some crooks slip through now and then than turn the country into North Korea.