Regulatory capture: a term used to refer to situations in which a state regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating.
See also John C. Dugan, Office of the Comptroller of the Currency. Related subject: Washington/Wall Street revolving door. From today’s New York Times:
John C. Dugan, a former bank lobbyist, has been comptroller since 2005…and he’s responsible for regulating banks with national charters, including giants like Citibank and Chase. Like his recent predecessors, Mr. Dugan often takes positions that align with banks, even as they have come under withering attack for their role in the financial crisis.”
“For now at least, the nation’s front line for consumer financial protection resides on the 34th floor of a downtown office tower here…The Office of the Comptroller of the Currency operates this service center, fielding thousands of complaints each year about the nation’s banks…What many customers may not realize is that the man who oversees the operation used to represent the very banks they are complaining about.
Here comes the revolving door:
“A 2005 appointee of President George W. Bush, Mr. Dugan came to the O.C.C. after working for 12 years as a lawyer and lobbyist representing the banking industry. Before that, he worked for the federal government, including stints as counsel for the Senate Banking Committee and as an assistant secretary in the Treasury Department.”
Mr. Dugan’s term expires in August. Any guesses where he’s headed after that?