Talk:Regulatory capture

Neutral Point of View

I think this article violates Neutral Point of View, and is not that informative.

There is a stub under Capture that's better and should be brought over and expanded:

In public choice theory and political science, capture is said to occur when bureaucrats or politicians, who are supposed be acting in the public interest, end up acting systematically to favor particular vested interests. The theory of capture is associated with nobel laureate economist George Stigler, one of its main developers.

Public choice theory holds that capture is inevitable, because vested interests have a concentrated financial stake in the outcomes of political decisions, thus ensuring that they will find means—direct or indirect—to capture decision makers.

While this inevitablist application of rational choice theory appears to be excessively pessimistic about government, capture is a commonly observable phenomenon.

I think examples are important. One might provide examples without violating neutrality by framing the examples in terms of who alleged regulatory capture and why, and perhaps providing discussion on hypotheses other than capture that could result in the appearance of capture. An example might be the practice of hiring from regulatory bodies: sure, it may look like it "proves" capture by showing that regulators were using their posts to prepare themselves for more lucrative private work, but it may also reflect the fact that regulated industries need regulatory experts and hire the expertise from the best source -- the industry's actual regulator.

wi-fi

re: A Modern Example

Is this really the appropriate place for promoting that screwball free wi-fi agenda? I'm deleting it. Come up with examples that have a more-than-tenuous relation to regulatory capture, and keep personal agendas out of it.

As if to illustrate the ideological motivation of Wikipedia article maintainers, the following message was sent to me after I pointed out the ridiculous insertion of "free wi-fi" agenda propaganda in this article:

Section deletion

Re: Regulatory capture

Section deletion without explanation can be considered vandalism.

Please do not add nonsense to Wikipedia; it is considered vandalism.

Good luck with your "free wi-fi" agenda, but be aware that you are actively turning Wikipedia into a grotesque sideshow. A reader comes to Wikipedia to learn more about regulatory capture and is instead greeted with pseudo-intellectual leftwing rhetoric about free wi-fi and net neutrality. Why not throw in "examples" about DRM and copyright law? It couldn't make this article any more clearly e-Leftist bullshit. Why not fire off intimidating messages to people who point this out?

As much as I don't like the tone above, I must agree with this anonymous user that this article carries an agenda pretty heavily. Certainly illustrive examples are helpful in encyclopedic articles, but it is not appropriate to go into so much detail on the example. There is more on net neutrality than on regulatory capture. Furthermore, I don't see the need for this specific example, given that there are already good examples above in the Department of Agriculture, etc.

As much as net neutrality seems like a good cause, this is not the proper format for it's promotion and I can't help but see its description here as a POV promotion of net neutrality.

Since I am not the only one who thinks this, I'm going to delete the section and paste it here for someone who can go through and figure out what, if any, of it is necessary for this article, from a neutral point of view.

Current concerns

Of particular concern in the early 21st century is the possible regulation of the internet with respect to net neutrality. Various proposals have been made by some economic interests to prohibit charges to content originators by carriers (internet service providers) based upon bandwidth consumption (the amount of traffic generated) and to prohibit discrimination in the level of service provided. Carriers argue that since they must finance the capital costs of improved delivery mechanisms, that the providers of material should bear the cost of delivery. Content providers argue that the cost is paid for by the consumer through expensive cable, digital subscriber line, and broadband wireless fees, with the principal argument being centered about favoritism and discrimination, in that certain delivery services may be connected financially to content providers, whom the carriers could then favor while discriminating against outside providers. The most effective form of discrimination would be for the carriers to provide slower service to uncooperative outside providers (providers not owned by or paying a toll to the carrier).

The danger of any regulatory action to enforce net neutrality is that the regulatory process would become captured by one or even both of the factions involved, who could then apply pressure upon the regulators by their influence upon the political process. Who would remain without significant influence in this process would be the consumers, who (it is argued) are at present becoming quite powerful in many locales by their ability to change providers (although generally only within a duopoly of cable TV internet or telephone DSL services). The ease of switching has gradually increased since third party e-mail services, free home pages in social networks, and customer controlled personal web sites allow the switch with few side effects, such as the need to notify all correspondents of a new address and additional access methods such as access by radio (WiFi) and satellite methods are gradually improving. The argument against regulation centers upon the consumer's ability to switch (as a countervailing force) and the likelihood of regulatory capture by the politically and financially powerful non-consumer interests involved.

Whether the industry has competition or is a monopoly is a key factual question underpinning the arguments over the danger of regulatory capture; the power which could be exerted through regulatory capture is generally already possessed by a monopoly. -Dwinetsk 23:40, 18 December 2006 (UTC)

A less controversial example

Let me first add my voice to those others who say that the municipal wi-fi example is a very poor choice of example. There is simply too much going on with it. I would like to see it dropped.

I think that there are much clearer examples of regulatory capture that serve the function of clarifying the notion to those unfamiliar with it and will be much more broadly recognized as an instance of regulatory capture. In brief the case of the FDA blocking import of drugs from Canada could not be defended in terms of ensuring that medications sold in the US are "safe and effective". But the effort could only be motivated (rightly or wrongly) as protecting the temporary patent monopolies that the drug developers had been granted. What makes this case less controversial is that even those who support the FDA ruling should acknowledge that its intent had little to do with safety and efficacy of the meds, but was about protecting the industry (for good or ill).

A more controversial set of examples would come from socialist societies with state ownership of key industries. In those cases the regulators (government) and the regulated (the industries) are one and the same. But I suspect that it would be better to avoid those examples. JPGoldberg 22:55, 3 June 2007 (UTC)

I believe we can find some peer reviewed studies on municipal wifi that would settle whether the issue is one of regulatory capture. Regulatory capture and political economy often overlap; although I agree that we can find much better documented historical examples of regulatory capture.

There are a large number of studies on the effect on broadband penetration on GDP and employment in the US. Even the FCC openly admits that they feel they are involved in regulatory capture; read the FCC reports on cable prices rising faster than inflation for the past two decades and extremely restricted competition in the broadband market. All attempts at deregulation or enforcement of rules that would increase competition in the broadband market have met heavy industry resistance. The FCC openly publishes reports that show that the FCC spectrum auctions are structured to favor incumbent wireless network service providers.

This article needs to include information about the well covered regulatory capture instances with the FDA and FCC. Industry groups like the RIAA and industry unions should also be mentioned as they are used to enforce collusion market strategies that would otherwise be illegal or infeasible. FCC spectrum auctions would be a good starting point. This article needs more peer reviewed journal and literature references.

We should recruit an interested economic historian for this article; it would greatly improve the quality and depth. Agalmic (talk) 01:27, 5 July 2008 (UTC)

Removing Possible Examples section

I'm removing the section because it looks like its nothing more than a collection of accusations and a soapbox for people advancing their political beliefs. The free wi-fi example has been covered above, and the other items offers arguments without counter-arguments, which violates WP:NPOV. Then again, if counter-arguments were given, without sources it'll be another batteground, another WP:NOT no-no. I'm not saying examples are out of the question on this page, but I'd like to see a well-researched example here instead with plenty of scholarly sources. hateless 00:12, 20 June 2007 (UTC)

The ICC comes up as the first search result for "regulatory capture" classic example, so I've restored that example and expanded it with a source. hateless 00:35, 20 June 2007 (UTC)

ICC is a very good example; it needs more information however. I really wish I had more time for writing articles; Friedman gave very good coverage of the ICC in "Free to Choose" if anyone wants source material for this section. Agalmic (talk) 01:29, 5 July 2008 (UTC)

Engineer in Canada

The way the "trademark on Engineering" example is described, it does not look necessarily like regulatory capture which involves the regulated gaining control of the regulator. The example seems to describe a cartel forming through the use of trademark law. A case of regulatory capture would be if there was a government body that certified engineers and an Engineering association was able to control that body to exclude non-members. I'm removing it. PrometheeFeu (talk) 16:13, 16 October 2010 (UTC)

recent article

A somewhat prominent recent article explains one case (though it doesn't use the actual term "capture"): http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216 -- AnonMoos (talk) 21:09, 3 March 2011 (UTC)

In his interview with Amy Goodman on February 22, 2011, the author of the article, Matt Taibbi does use the term "regulatory capture". I don't recall hearing him say it but once and it was very much toward the end, but he did use it. Btw, if you go to Google and type in the title of article, "Why isn't Wall Street in jail?", you get 2,820,000 hits, which spells out what "somewhat prominent" actually means. Marrante (talk) 14:29, 4 March 2011 (UTC)

Removal of the FAA from the list of examples

The FAA paragraph at best, is convoluted. At worst, it is a disparaging remark about an agency who deserves more respect. The CAB may or may not have been an oligopoly but RTCA most definitely is not. The primary influence that deregulation sought to change, was CAB regulation of pricing. This is similar to deregulation of telephone service. In terms of businesses financially able to build the so-called "last mile", the term oligopoly would apply to it.

RTCA, Inc, a volunteer non-profit agency with international membership, shields the FAA from the likelihood of becoming a victim to regulatory capture. The change made in September 2009 isn't relevant because the current beneficiaries are the same as those who benefited before the change. The term "customers" has no defacto meaning.

On a personal note, the FAA, particularly the engineering side, routinely behaves a standard to which other government agencies have yet to parallel. The safety and reliability of aviation software is a model to which any company who produces software can aspire. It is the envy of medical device software and of banking software. In contrast with the record established as a result of certification requirements, is the record established by medical devices, banking software, and desktop operating systems.

Kernel.package (talk) 19:00, 13 March 2011 (UTC)

Food and Drug Administration

There was only once source for the section on the FDA and I removed it:

"FDA Corruption & The Specter of Regulatory Capture". Regulatory Affairs Associates. Retrieved 1 March 2011.

This is not a legitimate source, it is from a website advertising a consulting firm's legal services in fighting the FDA. DFS (talk) 22:03, 27 March 2011 (UTC)

What regulatory capture is?

The examples section is ridiculous. Accusations do not regulatory capture make. --91.145.73.92 (talk) 14:19, 4 April 2011 (UTC)

If all you saw were accusations, you didn't read very closely. Marrante (talk) 18:38, 4 April 2011 (UTC)

Canada examples

This section needs a citation, and failing that, should deleted. There is a very good case to be made for CRTC capture, but we need to indicate the research. --tranquileye (talk) 18:42, 4 April 2011 (UTC)

NRC section

The section on NRC is misleading.

• Every request for a reactor license was granted, because the course of action when a request is likely to fail is to withdraw it, rather than waste time waiting for an official rejection. Moreover nobody is going to put in substantial money into filing an application only to have it denied. The person who made up this argument obviously knows nothing about this process, it's considerably more complicated than applying for a building permit.
• What does the Fukushima accident, which happened outside of NRC's jurisdiction, have to do with a plant in Vermont? Classical guilt by association.
• About Vermont: the anti-nuclear clowns are saying that NRC is supposed to be independent from politics when the state officials want a nuclear power plant built, but that it should respect the political will when they want a plant shut down. So which should it be?
• The problem about the leaking pipes was not that somebody at Entergy was lying but that the audience did not know the difference between buried piping and underground piping. http://yesvy.blogspot.com/2010/02/miscommunication.html
• Regardless of the above, the leak was trivial and the media attention it received was an example of radiation hysteria rather than legitimate concern.
• UCS and Greenpeace are notoriously unreliable sources about nuclear power, for instance Greenpeace claimed that 4 Japanese nuclear plants had a serious accident when in reality one suffered a serious accident, one had minor problems and two shut down without problem.

--Tweenk (talk) 08:39, 19 May 2011 (UTC)

I also note that it is overwhelmingly based on a single source that uses mainly quotes from anti-nuclear activists as its factual basis. Furthermore there appears to be no way to factually disprove such claims. When faced with evidence against this notion, the accusers will just move the goalposts. --Tweenk (talk) 08:47, 19 May 2011 (UTC)

Funny, I count five unique sources used in the NRC section, although it's true that one is used several times. The connection between the Vermont plant and the Fukushima Daiichi plant is that they use the same reactor design. Surely this is of some interest to Vermonters. The article now contains this information; my apologies for having inadvertently left it out before. Quotes from anti-nuclear "clowns", as you call them, are no less legitimate than those from nuclear industry "experts", who are well-paid for their statements. The "clowns" may well be more legitimate, if they prove more accurate and trustworthy when a nuclear accident takes place. Unfortunately, if it was the "experts" that everyone heeded, after the accident, it's little comfort to finally be accorded credibility from those who hurl names. Marrante (talk) 11:10, 19 May 2011 (UTC)

You might also be interested in this article, "Do NRC Inspectors Have the Training and Expertise to Do Their Jobs?", which begins, "A host of inconsistencies in the Nuclear Regulatory Commission's (NRC's) oversight of spent nuclear fuel storage is leading to increased public health and safety risks, according to a new report issued by the Commission's Inspector General (IG). The report, released May 19, found that the training and expertise of NRC staff who inspect independent spent fuel storage installations (ISFSIs) is mixed:..." I'm guessing you consider the Commission's own Inspector General to be a reliable source? Marrante (talk) 20:41, 23 May 2011 (UTC)

This section is now amended by an additional paragraph dealing with an AP investigation of the NRC that addresses these questions. Marrante (talk) 05:45, 24 June 2011 (UTC)

Lobbying

This article really ought to make a bigger deal of it. Also the CIA is a regulatory agency, as it a has a great deal of autonomy in the subject of foreign policy. --85.76.85.231 (talk) 13:31, 6 June 2011 (UTC)

Autonomy is not regulatory power. Tell me what the CIA regulates. All I know is that it collects and interprets information, conducts various operations consistent with a spy agency and advises governments. You or I may not like a lot of what it does, but that does not make it a regulatory agency. This article is about regulatory agencies, not spy agencies, no matter how corrupt. Marrante (talk) 14:46, 6 June 2011 (UTC)

From regulatory agency: "A regulatory agency is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity." --85.78.214.234 (talk) 16:46, 6 June 2011 (UTC)

Thank you. You have proven with this definition what a regulatory agency is. It regulates. Here is what the CIA mission statement says it does (from the the CIA's own website), with a change in verb tense:

• Collect information that reveals the plans, intentions and capabilities of our adversaries and provides the basis for decision and action.

• Produce timely analysis that provides insight, warning and opportunity to the President and decisionmakers charged with protecting and advancing America’s interests.

• Conduct covert action at the direction of the President to preempt threats or achieve US policy objectives.

Not a word about regulating. Case closed. Marrante (talk) 17:05, 6 June 2011 (UTC)

Federal Reserve / NY Fed

These sections ought to be expanded or removed. These are supposed to be examples of capture, yet the section on the Federal Reserve mentions no examples. The section on the NY Fed mentions the bank bailout, which is not a great example of capture. The definition of capture is that the agency pursues private special interests at the expense of public interests, but there are lots of people who see a public interest in not letting the banking system collapse.

Maybe it's not a great example of capture to you, but it sure works for me and for a lot of other people, such as the author of the quote at the end of the section. The banking system was in danger of collapse, but it is in no trouble now. The rest of the country, which was also in danger of collapse, is in the same or worse straits. The Fed was set up to regulate the banks, but it serves them instead, as with the bailout. How is that not capture and a great example of it? Bloomberg says the bailout added up to $12 trillion. Where is the public interest in giving the bankers who caused the problem that kind of money while the rest of the country loses their jobs and homes? Marrante (talk) 21:58, 18 July 2011 (UTC)

I'm not saying it wasn't in the banks' interest to get bailed out. I am saying it was arguably also in the public's interest to maintain a functional banking system. (Does it needs explaining why banking is crucial to the economy?) That makes it a bad example of regulatory capture.

No it doesn't. There's more than one way to skin a cat and keep the banking system afloat. The banks could have been nationalized for a period of time, rather than bailed out. That was what they were afraid might happen and were eager to forestall. The bailout was their preferred solution and the Fed went along with the plan rather than push for some sort of nationalization as Paul Krugman and others were proposing. The banks didn't want nationalization and it was taken off the table. That makes it an excellent example for capture, though it's true, I should (and will try to) find a source that states that clearly for those, such as yourself, who seem not to realize there was more than one solution to the problem. Marrante (talk) 18:55, 19 July 2011 (UTC)

Ok, but now we're fighting over a smaller scrap of land. It's not capture that *something* was done to mitigate the financial crisis (specifically AIG, here), instead you say it was capture that Fed chose the means it did. I'm more sympathetic with with that smaller and more nuanced claim, but the article ought to specifically explain and support it. Likewise for the secrecy charge. Sure, it sounds suspicious, but it's not immediately clear to me that the Fed's stated reasons for secrecy are dishonest or contrary to the public interest. Bottom line is that I guess I've seen too much facile opinionating on the right and left that just assumes without explanation or defense that the banks and the public/taxpayers don't have interests in common.

"Facile opinionating on the right and the left" - sounds fine if you're talking about a myriad of other topics, but you want me to say that bankers have the same interests as the public? Maybe in Canada or once upon a time, when the bank was a small, local and boring business that had a stake in the community, but now? I don't know how you can even make such statements with a straight face. A look at income distribution and how the gap between top and bottom has been growing for the past 30 years (and accelerated since 2008) makes it clear how foolish a statement that is. Look at Iceland. Take a look at the riots in Greece, Spain, France and England. Will Italy be next? This is all caused by governments captured by banks trying to make the public pay the bill that the bankers ran up. The banks want to party, but everyone else gets austerity programs shoved down their throats. How is it that the bankers claim no one knew the crash was coming, but Krugman, Gary J. Aguirre and Mark Pittman were able to predict it? Marrante (talk) 23:54, 19 July 2011 (UTC)

Ok, we're having a political argument now. Weird, because I doubt we're politically that far off, but it should only underscore the point that there's an objectivity problem with this section.

As far as the interests go, you already conceded that the public has an interest in having a functional banking system, and you can't doubt that it's in the banking industry's interest, to, well, bank. So QED, you have at least that shared interest. I didn't say the two sets of interests are identical (no two entities have exactly the same interests by definition, and it's almost as unlikely they'll have NO shared interests). As far as I can tell, you are just assuming that anything that helps the banks violates the public interest. What about sensible financial regulation that would ensure long-term stability of the banking sector? Good for the banks AND the public, wouldn't you say? (The fact that banks would/did fight this means only, as events have pretty well proven, that they have a lousy apprehension of their own risk levels, not that it isn't in their real interest to be so regulated.)

So, all I ask is that if you are going to give an example of regulatory agencies violating the public interest, you should explain how the public interest was violated in your example. You have to look at the interests involved, the choices open to the actors, etc. Best to cite a scholarly article on it, but really that's probably going to require original research, which doesn't belong on here anyway. Hence it's probably not the best example to use to show regulatory capture on Wikipedia. Being a bad example of something doesn't mean it can't also be true.

You've made or implied a number of claims so far in defense of this section. So far, they are 1) the AIG bailout was unnecessary to serve any public interest in preventing financial collapse (i.e. simple gift from the Fed), or 2) that other, more public friendly means were within the Fed's authority within the time window it was working with, or, your most recent claim, 3) that the crisis was intentionally precipitated because the bankers knew they would get bailed out. (Strangely, you bring up Iceland and Britain, which nationalized their banks.) Number 2) strikes me as very possible, but I'm not just going to believe because you said so, and I wouldn't put it on Wikipedia just because I believed it.

I'm not opposed to amending the article and believe I mentioned that yesterday, early on. The list of countries was just about all the upheaval caused by the financial crisis and was just my visceral reaction to the idea that the banks and the public have the same interests. Post-1929 till recent years, yes, but today, I don't see it, except on the most superficial basis in that the public needs a financial system and banks want to exist, or perhaps on an objective basis in which the desire for obscene profits is recognized by all as being bad for the public. I have no time to continue this discussion. You are wrong that I think anything that helps banks is against the public interest, but banking should be boring, conservative and regulated like it was after the Glass–Steagall Act. If it's exciting with wild profits for a few, it's against the public interest, as has been demonstrated by the global financial collapse. More of same, in the form of bailouts, was not in the public interest. Sensible financial regulation will be fought tooth and nail by the banks and their minions in government. I will look at doing more with the article, but I have tried to keep the sections brief. I can't work on it at present, but when things calm down around here, I will get back to it. Marrante (talk) 06:53, 20 July 2011 (UTC)

The OCC and the NY Fed

To the authors I say thank you. Some have argued this article is leftist propaganda or violates POV. I disagree. As a physicist I place great emphasis on observables. This article is nothing more than a list of observables that has been arranged in a particular way - the reason it stands out is that rarely are said observables listed in such context, most probably due to the fact that none of the protagonists are incentivised to ever release collated information of this matter. Further, on "being left", there is a relatively famous paper written on the economic consequences of being a lefty - Alvarez, Garrett and Lange (1991) show that positive economic performance in terms of GDP growth, inflationary pressures and unemployment rates are highly correlated with leftist cabinet compositions and strong unions. To keep this is context, it should be noted that AGL also find that poor economic performance is related to leftist government and weak unions, or rightist government and strong unions. A rightist government with weak unions is related to stronger economic performance - but not as pronounced as leftist government with strong unions.

On the topic of the OCC, there just is not enough frankly. Allow me to elaborate - The following is my summary of Spitzer's own article sourced from http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html and Harvard Law Review, Vol. 120, No. 2 (Dec., 2006), pp.627-634 " Federal Preemption. State Attorney General Power. Southern District of New York Rebuffs New York Attorney General's Bid to Regulate National Banks. Office of the Comptroller ofthe Currency v. Spitzer, 396 F. Supp. 2d 383 (S.D.N.Y. 2005)"

Eliot Spitzer, current Governor of New York and former NY Attorney General, gives a scathing account of the Bush administration. Mr. Spitzer suggests that the Bush administration took an active role in protecting the interests of banks at the expense of middle classes leading up to, and during, the subprime crisis. How? A rare event in American politics occurred when all 50 state AGs reached a unanimous consensus on predatory lending. Predatory lending may take the guise of misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with “teaser” rates, like ARMs, that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. Governor Spitzer was spitting with rage (excuse the pun) at the situation and he and his AG colleagues made a concerted effort to protect American home owners, through individual and collective state litigation. The AGs of America entered into settlements with many subprime lenders and enacted laws aimed at curbing such practices. In an incredible and under-publicised event, the Bush administration embarked on an aggressive and unprecedented campaign to essentially void the efforts of all 50 state AGs. The administration used the OCC as the vehicle for its obstruction, for the first time in its 140 year history, the OCC “was used as a tool against consumers”. The OCC invoked a law dating back to 1863 (National Bank Act) allowing the formal opinions of the OCC to pre-empt all state laws, thus effectively rendering the unanimous opinions of all 50 AGs null and void. The OCC went even further than this, preventing states from enforcing ANY of their own consumer protection laws against national banks. Naturally, such a course of action provoked all 50 state AGs and all 50 state banking superintendents to actively fight against the administration. Not only did the administration dismiss the opinions of the legal advisors on which the US is built, but it issued federal lawsuits via the OCC to stop any investigations into mortgage lending banks issued by the offices of US AGs! The rationale of the OCC and banks was that curbing predatory lending would exclude lower income Americans from access to credit. Governor Spitzer suggests that banning predatory lending would in no way jeopardise access to legitimate credit, rather, it would ensure borrowers got appropriately priced loans and would have mitigated the subsequent foreclosure rates and thus the degradation of the entire American economy. Is this yet another case of elitists buying power? It certainly was not done on a rational and academic basis, or even a legal one, as the AGs of America will testify. When it comes to big business and banks in particular, the story today is the same as the story told by history, money can buy the law. Governor Spitzer concludes his thoughts on the matter of the subprime lending crisis by saying, “The tale is still unfolding, but when the dust settles, it ( the Bush administration) will be judged as a willing accomplice to the lender who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state AGs and anyone else on the side of consumers”.

On the NY Fed, one might be interested to see Gorton and Metrick (2010), "Regulating the shadow banking system", for a thoroughly brilliant alternative view of the recent financial crisis. Gorton and Metrick argue that the Gramm-Leach-Bliley Act 1999(House) and 2000(Senate), allowing the repeal of Glass-Steagall (1933) and the Bank Holding Company Act (1956), in conjunction with The Bankruptcy Reform Act of 1999, may have caused the financial crisis. MAY is a key word here, as the authors admit trying to pin down the single root cause of the financial crisis “involves mostly guesswork” and that “there is no comprehensive data measuring the repo market”. What is not in question, however, is that Citigroup (as they are now known) expended the greatest amount of resources lobbying on those two particular pieces of legislation (Opensecrets.org will confirm this if you search for "bankruptcy" and "banking" using the "issue" search function - look at 1998-2001 and see if any firms stand out. This is the $figure of what insiders call the "find, grind and mind" of lobbying - find the client, grind out the legislation to favour said client, then mind the legislation (particularly in the hours leading up to key House and Senate votes) even AFTER the bill has been signed into law). In return Citigroup were "allowed" to consolidate with Travellers - creating a "Universal Bank" which could offer traditional residential finance, as well as offering insurance and securities trading. I say "allowed" to consolidate as Citigroup was trading as a single entity in 1998, well before the laws allowing it to do so were actually passed. I see there is a referenced article on this already on wikipedia. Citigroup were given a waiver on the implicit understanding that they could force the legislation they wanted through Congress within 2 years. Incredible gall really, assuming that you can change the law - what would otherwise have been an expensive gamble for Citi and Travellers was a sure thing. The bankruptcy reforms were equally as important to Citigroup - the 1999 Act created a bankruptcy safe harbour for repos. The strategic importance of which led to repos becoming "virtual money", especially when collateralised using dual-sourced securitised bonds - one source would be Citigroup itself. The other source would be the off-balance sheet SPV created by Citigroup. A neat trick to be sure, insuring yourself with your own loans. It doesn't even appear to matter if the bonds are junk, just as long as nobody holds onto them long enough to find out - lets make the repurchase agreement the next day but between now and then Citigroup will use your real money for risky investments. When you add in repothecation the job is complete. Well, almost. See, if those collateralised bonds are actually ABSs (in particular CDOs and their higher powers), nobody will ever find out how much they are fundamentally worth. Why? Well according to Roubini, it would take a high powered personal computer about 3 days to worked out the value of a single mid-powered CDO. This is why ABSs are generally known as being information insensitive, i.e. the cost of determining the fundamental value of these assets is so great that even to the most informed investor, this outlay would negate the profitability of purchasing or holding such an asset. Thus when the value of ABSs and their corresponding CDSs fell it was not profitable for firms or individuals to determine what their stock was fundamentally worth, rather investors expunged them from their balance sheets. Coincidentally the volume of repos (and also commercial paper it must be pointed out) declined massively in unison with the ABS/CDS market. A tenuous suggestion made by me (not Gorton and Metrick) is that perhaps a significant fraction of the increase in US house prices was due to banks being incentivised to repackage and securitise debt in this way to create virtual repo money capital. The demand for high yield debt encouraged banks to lend indiscriminately to service their expanding repo markets - when ABSs could no longer be used as collateral in repurchase agreements due to questions over their fundamental values, house prices and pretty much the entire Western economy tanked. 92.4.235.253 (talk) 21:44, 8 August 2011 (UTC)

Thank you for the compliment, support and especially for the information you posted here. I think this article could grow to be very long, so long it would need to be split into two or more articles. (And you are forgiven the pun.) Marrante (talk) 22:48, 8 August 2011 (UTC)

Name Change At BOEMRE

Um that agency (aka. former MMS) split into two last year, and hence no longer operates under that name. Marking section as "dated". — Preceding unsigned comment added by 68.108.237.62 (talk) 02:07, 17 February 2012 (UTC)

Thanks for calling attention to that. I have updated the section and removed the flag. With one agency changing its name twice and splitting into three organizations, it gets pretty complicated and hard to keep track, so I just left it under the second name for now, but it states right at the top that what was once MMS is now three separate organizations and gives their names. Marrante (talk) 07:54, 17 February 2012 (UTC)

Environmental Protection Agency (EPA)

The part on the Superfund does not appear to be an example of regulatory capture since the EPA is not acting in favor of a company by its own choice, but due to the law.Skingski (talk) 21:39, 5 June 2012 (UTC)

Legislative capture, then? —Tamfang (talk) 00:10, 6 June 2012 (UTC)

As you please, but does not belong here IMO Skingski (talk) 19:25, 7 June 2012 (UTC)

The Editing of Wikipedia itself is an example of capture

This just in from the department of not getting the irony:

The Editing of Wikipedia itself is an example of regulatory capture.

I'm not joking, and I'm not trolling, either.