Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
Gold and Silver - Counting Blessings and Tender Mercies - 20th Apr 14 - Jesse
The CIA Through The Looking-Glass - 20th Apr 14 - Stephen_Merrill
Gold And Silver - Gann, Cardinal Grand Cross, A Mousetrap, And Wrong Expectations - 20th Apr 14 - Michael Noonan
Nikkei Stock Market - Sell Japan - 20th Apr 14 - WavePatternTraders
America has Become a Police State - 19th Apr 14
Elite Herd Psychology And War By Default - 19th Apr 14
E.U. Officially Adopts the Bank Depositors Bail-In - 19th Apr 14
Goldman Sachs Is Highly Motivated To Low-Ball Gold Price - 19th Apr 14
Save MtGox - Bitcoin Important Implications of Going Down - 19th Apr 14
Stock Market SPX Topping Valuations - 19th Apr 14
Tesco Profits Panic! Back to Back £5 Off £40 Shop Voucher Promotions - 18th Apr 14
The Obama Game - Is Putin Being Lured Into a Trap? - 18th Apr 14
The Growing Threat to Capitalism - 18th Apr 14
Build Biotech Wealth on Solid Platforms - 18th Apr 14
Has Solar Power Finally Arrived? - 18th Apr 14
Bank Depositor Bail-Ins and Real Assets vs Liability-Based Assets - 18th Apr 14
10 Ways to Screw up Your Retirement - 17th Apr 14
One of Harry Dent’s Three Keys to Market Prediction is Cycles - 17th Apr 14
Obamacare Proof Stocks - 17th Apr 14
Gold, Silver And The Mining Sector: Prepare For A Severe Fall - 17th Apr 14
Hidden Australian Life Sciences Bio-tech Growth Stocks - 17th Apr 14
Disrupting Big Data Status Quo - 17th Apr 14
What the Stock Market Bears Have Been Waiting for... - 17th Apr 14
Copper Is Pathological and Suffers from SAD, but It Has Value - 17th Apr 14
Old World Order New World Order, Chaos And Change - 17th Apr 14
Even The US Government Will Abandon the U.S. Dollar - 17th Apr 14
Gold - Coming Super Bubble - 17th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Behind the SEC’s Revolving Door Between Jobs in Washington and Wall Street

Politics / Market Regulation Feb 17, 2013 - 05:32 PM GMT

By: PhilStockWorld

Politics

John Light writes: The Project on Government Oversight (POGO), a government accountability watchdog group, published a report this week on the so-called “revolving door” at the Securities and Exchange Commission. Authored by POGO Investigator Michael Smallberg, the report highlights numerous examples of how the back and forth of SEC regulators between jobs in Washington and on Wall Street blunts the agency’s effectiveness.


Smallberg includes recommendations for how the SEC and other parts of the government could take action to limit the negative effects of the revolving door. We spoke with Smallberg about his report and the corrosive effect of what he calls “regulatory capture” — what happens when an agency is “captured” by the industry it regulates.

John Light: Why is the revolving door a potential problem for regulatory bodies in general, and specifically for the SEC?

Michael Smallberg: When you have so many people going back and forth from a regulatory agency to the regulated industry, it can shape the mindset of people throughout the agency and make them more sympathetic to the viewpoints of industry groups, sometimes at the expense of people with a stake in the agency’s mission, like consumers, investors or shareholders. In some cases, people who used to work at the agency have connections to people who are still there. They can take advantage of that access to obtain favors for their clients, who, in many cases tend to be large institutions that have the resources to hire these alumni.

The revolving door creates a risk of what we call “regulatory capture” — when companies are able to sway the policies of the agency in their favor. Many of these agencies are supposed to be independent regulatory agencies — independent not only from political pressure that might be applied by Congress, but also from large industry groups. The revolving door between a regulator and a regulated industry creates at least a heightened danger of regulatory capture.

Then there’s a question of optics: The appearance that a regulatory agency is cozying up to the companies it’s supposed to regulate can undermine the public’s confidence in the regulatory system, which in turn can make the regulatory agencies less effective. And on another level, the revolving door can devalue the notion of public service. When you have so many people who are looking at their government position as a stepping stone to going into the private sector and making much larger salaries working for the big companies, we worry that will demoralize other civil servants who are looking at their government service as more of a life calling.

Light: Your report looks not just at the records of SEC commissioners, but of hundreds of lower-level employees who went on to represent employers and clients before the commission within two years of leaving. How can these low-level SEC employees influence regulation after they leave the organization?

Keep reading: Behind the SEC’s Revolving Door | Q&A | BillMoyers.com.

- Phil

Click here for a free trial to Stock World Weekly.

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2013 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PhilStockWorld Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014