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In
politics Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, such as the distribution of res ...

politics
, regulatory capture (also agency capture and
client politics Client politics is the type of politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, such as the distribution of resources or stat ...
) is a form of
corruption Corruption is a form of dishonesty Dishonesty is to act without honesty ''Diogenes Searching for an Honest Man'', attributed to J. H. W. Tischbein () Honesty or truthfulness is a facet Facets () are flat faces on geometric shapes. The org ...
of authority that occurs when a political entity,
policymaker Policy is a deliberate system of guideline A guideline is a statement by which to determine a course of action. A guideline aims to streamline particular processes according to a set routine or sound practice. Guidelines may be issued by ...
, or regulator is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group. When regulatory capture occurs, a special interest is prioritized over the general interests of the public, leading to a net loss for society. The theory of
client politics Client politics is the type of politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, such as the distribution of resources or stat ...
is related to that of
rent-seeking In public-choice theory, as well as in economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumpt ...
and political failure; client politics "occurs when most or all of the benefits of a program go to some single, reasonably small interest (e.g.,
industry Industry may refer to: Economics * Industry (economics) In macroeconomics, an industry is a branch of an economy that produces a closely related set of raw materials, goods, or services. For example, one might refer to the wood industry ...
, profession, or locality) but most or all of the costs will be borne by a large number of people (for example, all
taxpayers A taxpayer is a person or organization (such as a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal person, legal or a mixture of both, ...
)".


Theory

For public choice theorists, regulatory capture occurs because groups or individuals with high-stakes interests in the outcome of policy or regulatory decisions can be expected to focus their resources and energies to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether.Timothy B. Lee
"Entangling the Web"
''The New York Times'' (August 3, 2006). Retrieved April 1, 2011
Regulatory capture refers to the actions by
interest group Advocacy groups, also known as special interest groups, use various forms of advocacy Advocacy is an activity by an individual or group that aims to influence decisions within political, economic, and social institutions. Advocacy include ...
s when this is successful at influencing the staff or commission members of the regulator. Regulatory capture theory is a core focus of the branch of public choice referred to as the
economics of regulation Regulatory economics is the economics of regulation. It is the application of law by government or independent administrative agencies for various purposes, including remedying market failure, Environmental law, protecting the environment, and econo ...
; economists in this specialty are critical of conceptualizations of governmental regulatory intervention as being motivated to protect public good. Often cited articles include Bernstein (1955), Huntington (1952), Laffont & Tirole (1991), and Levine & Forrence (1990). The theory of regulatory capture is associated with Nobel laureate economist
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A br ...
, one of its major developers. Likelihood of regulatory capture is a risk to which an agency is exposed by its very nature. This suggests that a regulator should be protected from outside influence as much as possible. Alternatively, it may be better to not create a given agency at all. A captured regulator is often worse than no regulation, because it wields the authority of government. However, increased transparency of the agency may mitigate the effects of capture. Recent evidence suggests that, even in mature democracies with high levels of transparency and media freedom, more extensive and complex regulatory environments are associated with higher levels of corruption (including regulatory capture).
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A br ...
framed the problem of regulatory capture as “the problem of discovering when and why an industry is able to use the state for its purposes.”  He focuses on whole industries. But, it is never a whole industry which is ‘capturing’ its regulators, but only the big companies which, using the tool of the
revolving door A revolving door typically consists of three or four doors that hang on a central shaft and rotate around a vertical axis within a cylindrical enclosure. Revolving doors are energy efficient as they (acting as an airlock An airlock is a device ...
, ‘highjack’ the regulator by offering high salaries. Brezis and Cariolle (2019) has shown that the connected firms are always the big firms. Indeed, the top 5 financial companies concentrate around 80% of the stock of revolving door movements and regulatory capture. This leads to inequality of influence among firms in the same sector. It should also be noted that regulatory capture in developed country is not anymore related to corruption and illegal behavior, but to abuse of power.


Relationship with federalism

There is substantial academic literature suggesting that smaller government units are easier for small, concentrated industries to capture than large ones. For example, a group of states or provinces with a large timber industry might have their legislature and/or their delegation to the national legislature captured by lumber companies. These states or provinces then becomes the voice of the industry, even to the point of blocking national policies that would be preferred by the majority across the whole country. Moore and Giovinazzo (2012) call this "distortion gap". The opposite is possible. Very large and powerful industries (e.g. energy, banking, weapon system construction) can capture national governments, and then use that power to block policies at the national, state or provincial level that the voters may want, although even local interests can thwart national priorities.


Economic rationale

Regulatory capture has an economic basis: vested interests in an industry have the greatest financial stake in regulations affecting them, and so are more likely to try to influence the regulator than relatively dispersed individual consumers, each with little incentive. When regulators form expert bodies to examine policy, these invariably feature current or former industry members, or at the very least, individuals with lives and contacts in the industry. Capture is also facilitated where consumers or taxpayers have a poorer understanding than businesses of underlying issues. Jon Hanson and his co-authors argue that the phenomenon extends beyond political agencies and organizations. Businesses have an incentive to control anything that has power over them, including the media, academia and popular culture, and will try to capture them too. This is called "deep capture". Regulatory public interest is based on market failure and welfare economics. It holds that regulation is the response of the government to public needs. Its purpose is to make up for market failures, improve the efficiency of resource allocation, and maximize social welfare. Posner pointed out that the public interest theory contains the assumption that the market is fragile, and that if left unchecked, it will tend to be unfair and inefficient, and government regulation is a costless and effective way to meet the needs of social justice and efficiency. Mimik believes that government regulation is a public administration policy that focuses on private behavior. It is a rule drawn from the public interest. Irving and Brouhingan saw regulation as a way of obeying public needs and weakening the risk of market operations. They also expressed the view that regulation reflects the public interest.


Development

The review of the United States' history of regulation at the end of the 19th century, especially the regulation of railway tariffs by the Interstate Commerce Commission (ICC) in 1887, revealed that regulations and market failures are not co-relevant. At least until the 1960s, regulation was developed in the direction of favoring producers, and regulation increased the profits of manufacturers within the industry. In potentially competitive industries such as trucking and taxis, regulations allow higher prices and prevent entrants. In monopoly industries such as electric power generation, there is evidence that regulation has little effect on prices, so the industry can earn excess profits. Evidence shows that regulation is beneficial to producers. These observations led to the emergence and development of regulatory capture theory. Contrary to regulatory public interest theory, this holds that the provision of regulation adapts to the industry's needs, that is, both the legislator and regulator are controlled and captured by the industry. The basic view of the theory is that the regulator gets captured no matter how the regulatory scheme is designed. The implication is that regulation increases the industry's profits rather than the social welfare. This was essentially a purely capture theory in the early days, that is, the regulators and legislators were captured and controlled by the industry. Later regulatory models, such as those by Stigler, Pelzmann, or Becker, follow the regulatory capture theory in the eyes of Posner (1974) and others. All these models reflect that regulators and legislators are trying to maximize private, not public, interests. They use "private interest" theory to explain the origin and purpose of regulation. Aton (1986) argues that Stigler's theoretical logic is clearer and more central than the previous "capture theory" hypothesis, but it is difficult to distinguish between the two. Regulatory capture theory has a specific meaning, that is, an experience statement that regulations are beneficial for producers in real life. So it is essentially not a true regulatory theory. Although the analysis results are similar to the Stigler model, the methods are completely different. Stigler used standard economic analysis methods to analyze the regulation behavior, then created a new regulatory theory—regulatory economic theory. Of course, different divisions depend on the criteria for division, and they essentially depend on the researchers' different understanding of specific concepts. Justice Douglas’ dissent in '' Sierra Club v. Morton'' (1972) describes concern that regulators become too favorable with their regulated industries.


Types

There are two basic types of regulatory capture: * ''Materialist capture'', also called ''financial capture'', in which the captured regulator's motive is based on its material self-interest. This can result from bribery, revolving doors, political donations, or the regulator's desire to maintain its government funding. These forms of capture often amount to
political corruption Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain. Forms of corruption vary, but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, infl ...
. * ''Non-materialist capture'', also called ''cognitive capture'' or ''cultural capture'', in which the regulator begins to think like the regulated industry. This can result from interest groups lobbying the industry. Highly specialized technical industries can be at risk of cultural capture, because the regulating agency typically needs to employ experts in the regulated area, and the pool of such experts typically consists largely of existing or former employees from the regulated industry. Another distinction can be made between capture retained by big firms and by small firms. While Stigler mainly referred to large firms capturing regulators by bartering their vast resources (materialist capture), small firms are more prone to retain non-materialist capture via a special underdog rhetoric.


Examples


Europe


United States


Bureau of Ocean Energy Management, Regulation and Enforcement

In the aftermath of the 2010
Deepwater Horizon oil spill #REDIRECT Deepwater Horizon oil spill The ''Deepwater Horizon'' oil spill was an industrial disaster that began on 20 April 2010, in the Gulf of Mexico on the BP-operated Macondo Prospect, considered to be the largest marine oil spill in the ...
, the Minerals Management Service (MMS), which had regulatory responsibility for offshore oil drilling, was widely cited as an example of regulatory capture.
Thomas Frank Thomas Carr Frank (born March 21, 1965) is an American political analyst, historian, and journalist. He co-founded and edited ''The Baffler ''The Baffler'' is an American American(s) may refer to: * American, something of, from, or related to ...

"Obama and 'Regulatory Capture'"
''
The Wall Street Journal ''The Wall Street Journal'', also known as ''The Journal'', is an American business-focused, English-language international daily newspaper A newspaper is a periodical Periodical literature (also called a periodical publication or sim ...

The Wall Street Journal
'' (June 24, 2010). Retrieved April 5, 2011
The MMS then became the
Bureau of Ocean Energy Management, Regulation and Enforcement The Minerals Management Service (MMS) was an agency of the United States Department of the Interior that managed the nation's natural gas, oil and other mineral resources on the outer continental shelf (OCS). Due to perceived conflict of inter ...
(BOEMRE) and on October 1, 2010, the collection of mineral leases was split off from the agency and placed under the
Department of the Interior The United States Department of the Interior (DOI) is a federal executive department of the U.S. government The federal government of the United States (U.S. federal government or U.S. government) is the national government of the U ...
as the
Office of Natural Resources Revenue The Office of Natural Resources Revenue (ONRR) is a unit of the United States Department of the Interior The United States Department of the Interior (DOI) is a federal executive department of the U.S. government. It is responsible for the mana ...
(ONRR). On October 1, 2011, BOEMRE was then split into two bureaus, the
Bureau of Safety and Environmental Enforcement The Bureau of Safety and Environmental Enforcement (BSEE "Bessie") is an agency under the United States Department of the Interior The United States Department of the Interior (DOI) is a federal executive department of the . It is responsib ...
(BSEE) and the
Bureau of Ocean Energy Management The Bureau of Ocean Energy Management (BOEM) is an agency within the United States Department of the Interior, established in 2010 by Secretarial Order. The Outer Continental Shelf Lands Act (OCSLA) states: "...the outer Continental Shelf is a vi ...
(BOEM).Keith B. Hall
"BOEMRE splits – becomes BSEE and BOEM"
''Oil & Gas Law Brief'' (October 4, 2011). Retrieved February 17, 2012
The three-stage reorganization, including the name change to BOEMRE, was part of a re-organization by
Ken Salazar Kenneth Lee Salazar (born March 2, 1955) is an American lawyer, politician, and diplomat who is the United States ambassador to Mexico The United States The United States of America (USA), commonly known as the United States (U.S. or US ...
, who was sworn into office as the new Secretary of the Interior on the same day the name change was announced."Salazar Swears-In Michael R. Bromwich to Lead Bureau of Ocean Energy Management, Regulation and Enforcement"
Bureau of Ocean Energy Management, Regulation and Enforcement (June 21, 2010). Retrieved April 8, 2011
Salazar's appointment was controversial because of his ties to the energy industry.John M. Broder

''
The New York Times ''The New York Times'' is an American daily newspaper based in New York City with a worldwide readership. Founded in 1851, the ''Times'' has since won List of Pulitzer Prizes awarded to The New York Times, 132 Pulitzer Prizes, the most of a ...

The New York Times
'' (December 17, 2008). Retrieved April 8, 2011
As a senator, Salazar voted against an amendment to repeal tax breaks for
ExxonMobil Exxon Mobil Corporation, stylized as ExxonMobil, is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multip ...
and other major
petroleum Petroleum, also known as crude oil and oil, is a naturally occurring, yellowish-black liquid A liquid is a nearly incompressible In fluid mechanics or more generally continuum mechanics, incompressible flow (isochoric process, isoc ...

petroleum
companies and in 2006, he voted to end protections that limit
offshore oil drilling Offshore drilling is a mechanical process where a wellbore A borehole is a narrow shaft bored in the ground, either vertically or horizontally. A borehole may be constructed for many different purposes, including the extraction of water ...
in
Florida Florida is a U.S. state, state located in the Southeastern United States, Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia (U.S. state), Geor ...

Florida
's
Gulf A gulf is a large inlet from the ocean into the landmass, typically with a narrower opening than a bay (geography), bay, but that is not observable in all geographic areas so named. The term gulf was traditionally used for large highly-indented ...

Gulf
Coast. One of Salazar's immediate tasks was to "the department's coziness with the industries it regulates" but Daniel R. Patterson, a member of the
Arizona House of Representatives The Arizona House of Representatives is the lower house of the Arizona Legislature, the state legislature (United States), state legislature of the U.S. state of Arizona. The upper house is the Arizona Senate, Senate. Its members are elected t ...
, said "Salazar has a disturbingly weak conservation record, particularly on energy development, global warming, endangered wildlife and protecting scientific integrity. It's no surprise oil and gas, mining, agribusiness and other polluting industries that have dominated Interior are supporting rancher Salazar – he's their friend". Indeed, a spokesman for the
National Mining Association The National Mining Association (NMA) is a United States trade organization that lists itself as the voice of the mining industry in Washington, D.C. NMA was formed in 1995, and has more than 300 corporate members. History The National Mining Asso ...
, which lobbies for the mining industry, praised Salazar, saying that he was not doctrinaire about the use of
public lands In all modern Sovereign state, states, a portion of land is held by central or local governments. This is called public land, state land, or Crown land (Australia, New Zealand and Canada). The system of tenure of public land, and the terminology us ...

public lands
. MMS had allowed and dozens of other companies to drill in the
Gulf of Mexico The Gulf of Mexico ( es, Golfo de México) is an ocean basin 400px, Diagrammatic cross-section of an ocean basin, showing the various geographic features In hydrology Hydrology (from Greek: wikt:ὕδωρ, ὕδωρ, "hýdōr" meaning ...

Gulf of Mexico
without first attaining permits to assess threats to
endangered species An endangered species is a species In biology, a species is the basic unit of biological classification, classification and a taxonomic rank of an organism, as well as a unit of biodiversity. A species is often defined as the largest group ...
, as required by law.Ian Urbina
"U.S. Said to Allow Drilling Without Needed Permits"
''The New York Times'' (May 13, 2010). Retrieved April 8, 2011
BP and other companies were also given a blanket exemption ( categorical exclusion) from having to provide environmental impact statements. The
National Oceanic and Atmospheric Administration The National Oceanic and Atmospheric Administration (NOAA ) is an American scientific and regulatory agency within the United States Department of Commerce that forecasts weather, monitors oceanic and atmospheric conditions, charts the seas, c ...
(NOAA) issued strong warnings about the risks posed by such drilling and in a 2009 letter, accused MMS of understating the likelihood and potential consequences of a major spill in the Gulf of Mexico. The letter further accused MMS of highlighting the safety of
offshore drilling Offshore drilling is a mechanical process where a wellbore is drilled below the seabed. It is typically carried out in order to explore for and subsequently extract petroleum which lies in rock formations beneath the seabed. Most commonly, the t ...
while understating the risks and impact of spills and playing down the fact that spills had been increasing. Both current and former MMS staff scientists said their reports were overruled and altered if they found high risk of accident or environmental impact. Kieran Suckling, director of the
Center for Biological Diversity The Center for Biological Diversity is a nonprofit membership organization known for its work protecting endangered species An endangered species is a species that is very likely to become extinct in the near future, either worldwide or in a par ...
, said, "MMS has given up any pretense of regulating the offshore oil industry. The agency seems to think its mission is to help the oil industry evade environmental laws". After the Deepwater accident occurred, Salazar said he would delay granting any further drilling permits. Three weeks later, at least five more permits had been issued by the minerals agency. In March 2011, BOEMRE began issuing more offshore drilling permits in the Gulf of Mexico.Ryan Dezember
"U.S. to Issue More Gulf Drilling Permits"
''The Wall Street Journal'' (March 22, 2011). Retrieved April 8, 2011
Michael Bromwich Michael R. Bromwich (born December 19, 1953) is an American litigation attorney who was designated by President Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician and attorney who served as the 44th pr ...
, head of BOEMRE, said he was disturbed by the speed at which some oil and gas companies were shrugging off Deepwater Horizon as "a complete aberration, a perfect storm, one in a million", but would nonetheless soon be granting more permits to drill for oil and gas in the gulf.


Federal Aviation Administration

Since the
Federal Aviation Administration The Federal Aviation Administration (FAA) is the largest transportation agency of the U.S. government and regulates all aspects of civil aviation Civil aviation is one of two major categories of flying, representing all non-military and non- ...
(FAA) charter was amended in 1996, its sole focus has been the regulation of safety. A report by the
Department of Transportation ''Department of transportation'' (DOT) is the most common name for a government agency A government or state agency, sometimes an appointed commission, is a permanent or semi-permanent organization in the machinery of government that is responsi ...
found that FAA managers had allowed
Southwest Airlines Southwest Airlines Co., typically referred to as Southwest, is one of the major airlines of the United States Major is a military rank Military ranks are a system of hierarchical relationships in armed forces A military, als ...
to fly 46 airplanes in 2006 and 2007 that were overdue for safety inspections, ignoring concerns raised by inspectors. Audits of other airlines resulted in two airlines grounding hundreds of planes, causing thousands of flight cancellations.Paul Lowe
"Bill proposes distance between airlines and FAA regulators"
AINonline.com (September 1, 2008). Retrieved April 11, 2011
The House Transportation and Infrastructure Committee investigated the matter after two FAA
whistleblower A whistleblower (also written as whistle-blower or whistle blower) is a person, usually an employee, who exposes information or activity within a private, public, or government organization that is deemed illegal, illicit, unsafe, fraud, or abus ...

whistleblower
s, inspectors Charalambe "Bobby" Boutris and Douglas E. Peters, contacted them. Boutris said he attempted to ground Southwest after finding cracks in the
fuselage In aeronautics Aeronautics is the science or art involved with the study, design process, design, and manufacturing of air flight–capable machines, and the techniques of operating aircraft and rockets within the atmosphere. The British Ro ...

fuselage
, but was prevented by supervisors he said were friendly with the airline.Johanna Neuman
"FAA's 'culture of coziness' targeted in airline safety hearing"
''
Los Angeles Times The ''Los Angeles Times'' (abbreviated as ''LA Times'') is a daily newspaper A newspaper is a containing written and is often typed in black ink with a white or gray background. Newspapers can cover a wide variety of fields such as , ...

Los Angeles Times
'' (April 3, 2008). Retrieved April 11, 2011
The committee subsequently held hearings in April 2008. James Oberstar, former chairman of the committee said its investigation uncovered a pattern of regulatory abuse and widespread regulatory lapses, allowing 117 aircraft to be operated commercially although not in compliance with FAA safety rules. Oberstar said there was a "culture of coziness" between senior FAA officials and the airlines and "a systematic breakdown" in the FAA's culture that resulted in "malfeasance, bordering on corruption". On July 22, 2008, a bill was unanimously approved in the Democrat-controlled
House A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house A house is a single-unit residential building, which may range ...
to tighten regulations concerning airplane maintenance procedures, including the establishment of a whistleblower office and a two-year "cooling off" period that FAA inspectors or supervisors of inspectors must wait before they can work for those they regulated. The bill also required rotation of principal maintenance inspectors and stipulated that the word "customer" properly applies to the flying public, not those entities regulated by the FAA. The bill died in the
United States Senate Committee on Commerce, Science, and Transportation The United States Senate Committee on Commerce, Science, and Transportation is a standing committee A committee or commission is a body of one or more persons subordinate to an assembly. A committee is not itself considered to be a form of a ...
that year. In 2008 the FAA proposed to fine Southwest $10.2 million for failing to inspect older planes for cracks,David Koenig
"Southwest Airlines faces $10.2 million fine"
''
Mail Tribune The ''Mail Tribune'' is a seven-day daily newspaper based in Medford, Oregon, United States that serves Jackson County, Oregon, and adjacent areas of Josephine County, Oregon and northern California. Its coverage area centers on Medford and Ashl ...
'',
Associated Press The Associated Press (AP) is an American non-profit A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, publ ...

Associated Press
(March 6, 2008). Retrieved April 11, 2011
and in 2009 Southwest and the FAA agreed that Southwest would pay a $7.5 million penalty and would adapt new safety procedures, with the fine doubling if Southwest failed to follow through. In September 2009, FAA Administrator Randy Babbitt issued a directive mandating that the agency use the term "customers" only to refer to the flying public. Prior to the deregulation of the US air industry, the
Civil Aeronautics Board The Civil Aeronautics Board (CAB) was an agency Agency may refer to: * a governmental or other institution Institutions, according to Samuel P. Huntington, are "stable, valued, recurring patterns of behavior". Institutions can refer to me ...

Civil Aeronautics Board
served to maintain an
oligopoly An oligopoly (from Greek#REDIRECT Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is a country located in Southeast Europe. Its population is appro ...
of US airlines. In a June 2010 article on regulatory capture, the FAA was cited as an example of "old-style" regulatory capture, "in which the airline industry openly dictates to its regulators its governing rules, arranging for not only beneficial regulation but placing key people to head these regulators".Steven M. Davidoff
"The Government's Elite and Regulatory Capture"
''The New York Times'' (June 11, 2010). Retrieved April 11, 2011
That the FAA was a victim of regulatory capture was one focus of a United States Senate Commerce Subcommittee on Aviation and Space meeting held in the wake of the
Ethiopian Airlines Flight 302 Ethiopian Airlines Flight 302 was a scheduled international passenger flight from Addis Ababa Bole International Airport Addis Ababa Bole International Airport is an international airport An international airport is an airport ...
crash that followed a previous crash of a
Lion Air PT Lion Mentari Airlines, operating as Lion Air, is an Indonesian low-cost airline. Based in Jakarta Jakarta (; ), officially the Special Capital Region of Jakarta ( id, Daerah Khusus Ibukota Jakarta), is the Capital of Indonesia, capita ...

Lion Air
flight and claimed 157 lives. The
Boeing 737 MAX The Boeing 737 MAX is the fourth generation of Boeing 737 The Boeing 737 is a produced by at its in . Developed to supplement the on short and thin routes, the retains the fuselage cross-section and nose with two underwing s. Env ...
platform that crashed had been subjected to only an "amended"
airworthiness Airworthiness is the measure of an aircraft An aircraft is a vehicle that is able to flight, fly by gaining support from the Atmosphere of Earth, air. It counters the force of gravity by using either Buoyancy, static lift or by using the Lif ...
type certificate A type certificate signifies the airworthiness Airworthiness is the measure of an aircraft's suitability for Air safety, safe flight. Certification of airworthiness is conferred by a certificate of airworthiness from the state of aircraft registry ...
. The
NTSB The National Transportation Safety Board (NTSB) is an independent U.S. government investigative agency responsible for civil transportation Transport (in British English British English (BrE) is the standard dialect of the Englis ...

NTSB
was tasked with the investigation of the FAA's certification process.


Federal Communications Commission

Legal scholars have pointed to the possibility that federal agencies such as the
Federal Communications Commission The Federal Communications Commission (FCC) is an independent agency A regulatory agency or regulatory authority, is a Public benefit corporation Public-benefit corporation is a term that has different meanings in different jurisdictions. I ...
(FCC) had been captured by
media conglomerates A media conglomerate, media group, or media institution is a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal personality, legal or a mix ...
. Peter Schuck of
Yale Law School Yale Law School (often referred to as Yale Law or YLS) is the law school A law school (also known as a law centre or college of law) is an institution specializing in legal education Legal education is the education of individuals in the ...
has argued that the FCC is subject to capture by the media industries' leaders and therefore reinforce the operation of corporate cartels in a form of "corporate socialism" that serves to "regressively tax consumers, impoverish small firms, inhibit new entry, stifle innovation, and diminish consumer choice". The FCC selectively granted communications licenses to some radio and television stations in a process that excludes other citizens and little stations from having access to the public. Michael K. Powell, who served on the FCC for eight years and was chairman for four, was appointed president and
chief executive officer A chief executive officer (CEO), chief administrator officer, or just chief executive (CE), is one of a number of corporate executives A corporation is an organization—usually a group of people or a company A company, abbreviated as c ...
of the
National Cable & Telecommunications Association NCTA – The Internet & Television Association (formerly the National Cable & Telecommunications Association, and commonly known as the NCTA) is the principal trade association for the U.S. broadband and pay television industries, representing mo ...
, a lobby group, effective April 25, 2011. His role has been the cable industry’s leading advocate, spokesman, and representative in its relationship with the U.S. Congress, the Administration, the FCC, and other federal agencies.
Meredith Attwell Baker Meredith Attwell Baker is the president and chief executive officer A chief executive officer (CEO), chief administrator officer, or just chief executive (CE), is one of a number of corporate executives A corporation is an organization—usu ...

Meredith Attwell Baker
was one of the FCC commissioners who approved a controversial merger between
NBC Universal The National Broadcasting Company (NBC) is an Television in the United States, American English-language Commercial broadcasting, commercial television network, broadcast television and radio network owned by Comcast. The network is headqua ...

NBC Universal
and
Comcast Comcast Corporation (formerly known as American Cable Systems and Comcast Holdings)Before the AT&T AT&T Inc. is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in mult ...
. Four months later, she announced her resignation from the FCC to join Comcast's Washington, D.C. lobbying office.Edward Wyatt
"F.C.C. Commissioner Leaving to Join Comcast"
''The New York Times'' (May 11, 2011). Retrieved May 12, 2011
Legally, she is prevented from lobbying anyone at the FCC for two years and an agreement made by Comcast with the FCC as a condition of approving the merger will ban her from lobbying any
executive branch The executive (short for executive branch or executive power) is the part of government that enforces law, and has Moral responsibility, responsibility for the governance of a State (polity), state. In political systems based on the principle ...
agency for life. Nonetheless, Craig Aaron, of Free Press, who opposed the merger, complained that "the complete capture of government by industry barely raises any eyebrows" and said public policy would continue to suffer from the "continuously revolving door at the FCC". In July 2019, congresswomen
Elizabeth Warren Elizabeth Ann Warren (née__NOTOC__ A birth name is the name of the person given upon their birth. The term may be applied to the surname, the given name or to the entire name. Where births are required to be officially registered, the en ...
and
Pramila Jayapal Pramila Jayapal ( ; born September 21, 1965) is an American politician serving as the U.S. Representative for since 2017. A member of the Democratic Party, she represents most of Seattle Seattle ( ) is a port, seaport city on the West C ...
issued a letter (citing a report by the Project On Government Oversight) showing concerns for the composition of the FCC's Communications Security, Reliability and Interoperability Council (CSRIC), questioning whether it could effectively serve the public interest if the majority of its members were representatives of the private sector. They wrote that "having the FCC's policy-making process rely on input from individuals employed by, or affiliated with, the corporations that it is tasked with overseeing is the very definition of regulatory capture".


Food and Drug Administration


Federal Reserve Bank of New York

The
Federal Reserve Bank of New York The Federal Reserve Bank of New York is one of the 12 Federal Reserve Bank A Federal Reserve Bank is a regional bank of the Federal Reserve System The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the ...
(New York Fed) is the most influential of the Federal Reserve Banking System. Part of the New York Fed's responsibilities is the regulation of
Wall Street Wall Street is an eight-block-long street in the Financial District This is a list of financial districts in cities around the world. Background A financial district is usually a central area in a city where financial services firms suc ...

Wall Street
, but its president is selected by and reports to a board dominated by the chief executives of some of the banks it oversees.Jo Becker and Gretchen Morgenson
"Geithner, Member and Overseer of Finance Club"
''The New York Times'' (April 26, 2009). Retrieved April 11, 2011
While the New York Fed has always had a closer relationship with Wall Street, during the years that
Timothy Geithner Timothy Franz Geithner (; born August 18, 1961) is a former American central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity), state or formal moneta ...
was president, he became unusually close with the scions of Wall Street banks, a time when banks and
hedge fund A hedge fund is a pooled investment fund Image:Financial info.jpg, The values and performance of collective funds are listed in newspapers. An investment fund is a way of investment, investing money alongside other investors in order to benefit ...
s were pursuing investment strategies that caused the
financial crisis of 2007–2008 The financial crisis of 2007–2008, or global financial crisis (GFC), was a severe worldwide economic crisis An economy (from Greek οίκος – "household" and νέμoμαι – "manage") is an area of the production, distribution and ...
, which the Fed failed to stop. During the crisis, several major banks that were on the verge of collapse were rescued via the
Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008, often called the "bank bailout of 2008", was proposed by Treasury Secretary The United States secretary of the treasury is the head of the United States Department of the Treasury The De ...
. Geithner engineered the New York Fed's purchase of $30 billion of
credit default swap A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default Default may refer to: Law * Default (law), the failure to do something required by law ** Defaul ...
s from
American International Group American International Group, Inc., also known as AIG, is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. , AIG companies employed 49,600 people.Goldman Sachs The Goldman Sachs Group, Inc. () is an American multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as tim ...

Goldman Sachs
,
Merrill Lynch Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management Investment management is the professional asset management Asset management refers to a system ...
,
Deutsche Bank Deutsche Bank AG () is a German multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effo ...

Deutsche Bank
and
Société Générale Société Générale S.A. (), often nicknamed "SocGen" (), is a French multinational Investment banking, investment bank and financial services company headquartered in Paris, France. The company is a universal bank and has divisions supporting ...

Société Générale
. By purchasing these contracts, the banks received a "back-door bailout" of 100 cents on the dollar for the contracts.David Reilly
"Secret Banking Cabal Emerges From AIG Shadows"
Bloomberg (January 29, 2010). Retrieved April 11, 2011
Had the New York Fed allowed AIG to fail, the contracts would have been worth much less, resulting in much lower costs for any taxpayer-funded bailout. Geithner defended his use of unprecedented amounts of taxpayer funds to save the banks from their own mistakes, saying the financial system would have been threatened. At the January 2010 congressional hearing into the AIG bailout, the New York Fed initially refused to identify the
counterparties A counterparty (sometimes contraparty) is a Juristic person, legal entity, unincorporated entity, or collection of entities to which an exposure to financial risk might exist. The word became widely used in the 1980s, particularly at the time of the ...

counterparties
that benefited from AIG's bailout, claiming the information would harm AIG. When it became apparent this information would become public, a legal staffer at the New York Fed e-mailed colleagues to warn them, lamenting the difficulty of continuing to keep Congress in the dark. calls the bailout a crime and says "the regulatory system has become captive to the banks and the non-banks".


Interstate Commerce Commission

Historians, political scientists, and economists have often used the
Interstate Commerce Commission The Interstate Commerce Commission (ICC) was a regulatory agency A regulatory agency or regulatory body, is a government authority that is responsible for exercising autonomous dominion The word Dominion was used from 1907 to 1948 to ref ...

Interstate Commerce Commission
(ICC), a now-defunct federal regulatory body in the United States, as a classic example of regulatory capture. The creation of the ICC was the result of widespread and longstanding anti-railroad agitation.
Richard Olney Richard Olney (September 15, 1835 – April 8, 1917) was an American American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the United States The United States of Ameri ...
, a prominent railroad lawyer, was asked by a railroad president if he could do something to get rid of the ICC. Letter by Richard Olney to Charles Perkins, President, Chicago, Burlington & Quincy Railroad, December 28, 1892. Olney, who later was appointed
Attorney General #REDIRECT Attorney general In most common law In law, common law (also known as judicial precedent or judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinio ...
in the
Grover Cleveland Stephen Grover Cleveland (March 18, 1837June 24, 1908) was an American lawyer and politician who served as the 22nd and 24th president of the United States The president of the United States (POTUS) is the head of state A h ...

Grover Cleveland
administration, replied in an 1892 letter, While the
Interstate Commerce Act The Interstate Commerce Act of 1887 is a United States federal law that was designed to regulate the railroad industry, particularly its monopoly, monopolistic practices. The Act required that railroad rates be "reasonable and just," but did not em ...
forbade "undue and unreasonable prejudice" against interstate passengers, in the sixty-six years before
Sarah Keys v. Carolina Coach Company ''Sarah Keys v. Carolina Coach Company'', 64 MCC 769 (1955) is a landmark civil rights case in the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous Uni ...
(1955) the ICC had ruled against every black petitioner bringing a
racial segregation Racial segregation is the systematic separation of people into race (human classification), racial or other Ethnicity, ethnic groups in daily life. Racial segregation can amount to the international crime of apartheid and a crimes against hum ...
complaint, earning the nickname "The Supreme Court of the
Confederacy Confederacy may refer to: A confederation, an association of sovereign states or communities. Examples include: * Battle of the Trench, Confederate tribes * Confederate States of America, a confederation of secessionist American states that existed ...

Confederacy
". The ICC then failed to enforce ''Keys vs. Carolina Coach'', attempting to justify segregation on a
separate but equal Separate but equal was a legal doctrine in United States constitutional law United States constitutional law is the body of law governing the interpretation and implementation of the United States Constitution The Constitution of the Un ...
basis for six years before being forced by the
Department of Justice A justice ministry, ministry of justice, or department of justice is a ministry or other government agency A government or state agency, sometimes an appointed commission, is a permanent or semi-permanent organization in the machinery of governme ...
under then
Attorney General #REDIRECT Attorney general In most common law In law, common law (also known as judicial precedent or judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinio ...
Robert F. Kennedy to act in response to the
Freedom Riders Freedom Riders were civil rights activists who rode interstate buses into the Racial segregation in the United States, segregated Southern United States, Southern United States in 1961 and subsequent years to challenge the non-enforcement of ...
protests of 1961.


Nuclear Regulatory Commission

According to Frank N. von Hippel, despite the 1979
Three Mile Island accident The Three Mile Island accident was a partial meltdown of the Three Mile Island 3 is a number, numeral, and glyph. 3, three, or III may also refer to: * AD 3, the third year of the AD era * 3 BC, the third year before the AD era * March, th ...
in Pennsylvania, the
Nuclear Regulatory Commission The Nuclear Regulatory Commission (NRC) is an independent agency of the United States government Independent agencies of the United States federal government The federal government of the United States (U.S. federal government or U.S. ...
(NRC) has often been too timid in ensuring that America's 104 commercial reactors are operated safely:
Nuclear power is a textbook example of the problem of "regulatory capture"—in which an industry gains control of an agency meant to regulate it. Regulatory capture can be countered only by vigorous public scrutiny and Congressional oversight, but in the 32 years since Three Mile Island, interest in nuclear regulation has declined precipitously.
Then-candidate
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician and attorney who served as the 44th president of the United States The president of the United States (POTUS) is the head of state and head of government ...

Barack Obama
said in 2007 that the five-member NRC had become "captive of the industries that it regulates" and Joe Biden indicated he had absolutely no confidence in the agency.Justin Elliott
"Ex-regulator flacking for pro-nuke lobby"
Salon.com (March 17, 2011). Retrieved March 18, 2011
The NRC has given a license to "every single reactor requesting one", according to
Greenpeace USA Greenpeace USA is the United States affiliate of Greenpeace, an international environmental nonprofit organization. History Greenpeace was first founded in the United States in 1975, when Greenpeace San Francisco opened, followed by groups in Haw ...
nuclear policy analyst Jim Riccio to refer to the agency approval process as a "rubber stamp".Kate Sheppard
"Is the Government's Nuclear Regulator Up to the Job?"
''
Mother Jones Mary G. Harris Jones (1837 (baptized) – 30 November 1930), known as Mother Jones from 1897 onwards, was an Irish-born American schoolteacher and dressmaker who became a prominent union organizer, community organizer, and activist. She hel ...
'' (March 17, 2011). Retrieved March 18, 2011
In Vermont, ten days after the 2011 Tōhoku earthquake and tsunami that damaged Japan's Daiichi plant in
Fukushima may refer to: Japan * Fukushima Prefecture Fukushima Prefecture (; ja, 福島県, Fukushima-ken, ) is a Prefectures of Japan, prefecture of Japan located in the Tōhoku region of Honshu. Fukushima Prefecture has a population of 1,848,257 ( ...
, the NRC approved a 20-year extension for the license of
Vermont Yankee Nuclear Power Plant Vermont Yankee was an electricity generating nuclear power plant A nuclear power plant (sometimes abbreviated as NPP) is a thermal power station in which the heat source is a nuclear reactor. As is typical of thermal power stations, heat is us ...

Vermont Yankee Nuclear Power Plant
, although the Vermont state legislature had voted overwhelmingly to deny such an extension. The Vermont plant uses the same GE Mark 1 reactor design as the Fukushima Daiichi plant. The plant had been found to be leaking
radioactive Radioactive decay (also known as nuclear decay, radioactivity, radioactive disintegration or nuclear disintegration) is the process by which an unstable atomic nucleus The atomic nucleus is the small, dense region consisting of s and s ...

radioactive
materials through a network of underground pipes, which
Entergy Entergy Corporation is a Fortune 500 The ''Fortune'' 500 is an annual list compiled and published by ''Fortune Fortune may refer to: General * Fortuna or Fortune, the Roman goddess of luck * Luck, a chance happening, or that which happens bey ...
, the company running the plant, had denied under oath even existed. Representative Tony Klein, who chaired the Vermont House of Representatives, Vermont House Natural Resources and Energy Committee, said that when he asked the NRC about the pipes at a hearing in 2009, the NRC didn't know about their existence, much less that they were leaking. On March 17, 2011, the Union of Concerned Scientists (UCS) released a study critical of the NRC's 2010 performance as a regulator. The UCS said that through the years, it had found the NRC's enforcement of safety rules has not been "timely, consistent, or effective" and it cited 14 "near-misses" at U.S. plants in 2010 alone.Jia Lynn Yang
"Democrats step up pressure on nuclear regulators over disaster preparedness"
''The Washington Post'' (March 18, 2011). Retrieved March 19, 2011
Tyson Slocum, an energy expert at Public Citizen said the nuclear industry has "embedded itself in the political establishment" through "reliable friends from George Bush to Barack Obama", that the government "has really just become cheerleaders for the industry".Eric Lichtblau
"Lobbyists' Long Effort to Revive Nuclear Industry Faces New Test"
''The New York Times'' (March 24, 2011). Retrieved March 25, 2011
Although the exception, there have been instances of a revolving door (politics), revolving door. Jeffrey Merrifield, who was on the NRC from 1997 to 2008 and was appointed by presidents Bill Clinton, Clinton and George W. Bush, Bush, left the NRC to take an executive position at The Shaw Group, which has a nuclear division regulated by the NRC.Pete Domenici, a former U.S. senator now promotes nuclear energy. Over the course of his 20 years in government, he received $1.25 million in political contributions connected with the energy sector. From 2000 to 2010, the nuclear industry and people who work in it, contributed $4.6 million to members of Congress, in addition to the $54 million spent by electric utilities, trade groups and other supporters to hire lobbyists, including some former members of Congress. (See Eric Lichtblau
"Lobbyists' Long Effort to Revive Nuclear Industry Faces New Test"
''The New York Times'' (March 24, 2011)
The NRC Office of Inspector General concluded that Merrifield violated federal ethics laws by failing to recuse himself from matters affecting prospective employers with which he was interviewing. The NRC Inspector General's report detailed that Merrifield had voted twice on matters involving companies he had contacted about job prospects. In addition, the report noted that Merrifield called a senior executive at another utility to request that he encourage other companies to return calls about his job search. The report also noted that Merrifield failed to report certain reimbursed travel expenses for himself and his family. One of those interviewed by the NRC Inspector General was Dale Klein, Chairman of the NRC at the time. Klein commented that "Merrifield generally was a staunch advocate of his chosen positions and was reluctant to change his mind." The interview notes also indicated that "other Commissioners also commented that Merrifield was excessively touting his accomplishments within [a] task force, but Klein indicated that this self-promoting tendency by Merrifield was not unique to this issue." Although the NRC referred the matter to the Justice Department for civil action and to the U.S. Attorney's office for criminal action, neither office pursued the matter. The same U.S. Attorney's Office declined all 20 similar referrals for prosecution during the period from 2004-2008. A year-long
Associated Press The Associated Press (AP) is an American non-profit A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, publ ...

Associated Press
(AP) investigation showed that the NRC, working with the industry, has relaxed regulations so that aging reactors can remain in operation.Jeff Donn
"U.S. nuclear regulators weaken safety rules"
Salon.com (June 20, 2011). Retrieved June 20, 2011
The AP found that wear and tear of plants, such as clogged lines, cracked parts, leaky seals, rust and other deterioration resulted in 26 alerts about emerging safety problems and may have been a factor in 113 of the 226 alerts issued by the NRC between 2005 and June 2011. The NRC repeatedly granted the industry permission to delay repairs and problems often grew worse before they were fixed.According to the AP, of the United States' 104 operating nuclear power plants, 82 are over 25 years old, the NRC has re-licensed 66 for 20 additional years and another 16 renewal applications are under review. However, a paper by Stanford University economics professors John B. Taylor and Frank A. Wolak compared the financial services and nuclear industries. While acknowledging both are susceptible in principle to regulatory capture, they concluded regulatory failure – including through regulatory capture – has been much more of a problem in the financial industry and even suggested the financial industry create an analog to the Institute of Nuclear Power Operations to reduce regulatory risk.


Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) has strongly opposed the efforts of the 50 state attorney general, state attorneys general, who have banded together to penalize banks and reform the mortgage modification process, following the subprime mortgage crisis and the financial crisis of 2008. This example was cited in ''
The New York Times ''The New York Times'' is an American daily newspaper based in New York City with a worldwide readership. Founded in 1851, the ''Times'' has since won List of Pulitzer Prizes awarded to The New York Times, 132 Pulitzer Prizes, the most of a ...

The New York Times
'' as evidence that the OCC is "a captive of the banks it is supposed to regulate".


Securities and Exchange Commission

The United States Securities and Exchange Commission (SEC) has also been accused of acting in the interests of
Wall Street Wall Street is an eight-block-long street in the Financial District This is a list of financial districts in cities around the world. Background A financial district is usually a central area in a city where financial services firms suc ...

Wall Street
banks and
hedge fund A hedge fund is a pooled investment fund Image:Financial info.jpg, The values and performance of collective funds are listed in newspapers. An investment fund is a way of investment, investing money alongside other investors in order to benefit ...
s and of dragging its feet or refusing to investigate cases or bring charges for fraud and insider trading. Financial analyst Harry Markopolos, who spent ten years trying to get the SEC to investigate Bernie Madoff, called the agency "nonfunctional, captive to the industry". Similarly in the case of the Allen Stanford Ponzi scheme, there were repeated warnings of fraud from both inside and outside the SEC for more than a decade. But the agency did not stop the fraud until 2009, after the Madoff scandal became public in 2008. The SEC has been found by the U.S. Senate Committee on Finance, the Senate Judiciary Committee and a federal district court to have illegally dismissed an employee in September 2005 who was critical of superiors' refusal to pursue
Wall Street Wall Street is an eight-block-long street in the Financial District This is a list of financial districts in cities around the world. Background A financial district is usually a central area in a city where financial services firms suc ...

Wall Street
titan John J. Mack, John Mack. Mack was suspected of giving insider information to Arthur J. Samberg, head of Pequot Capital Management, once one of the world's largest hedge funds."Pequot Capital and Its Chief Agree to Settle S.E.C. Suit for $28 Million"
''The New York Times'' (May 27, 2010). Retrieved March 4, 2011
After more than four years of legal battles, former SEC investigator Gary J. Aguirre filed papers in a Freedom of Information Act (United States), Freedom of Information Act (FOIA) case he had against the SEC, seeking an order to force the SEC to turn over Pequot investigation records to him on the grounds that they had not charged anyone. Aguirre had already provided incriminating evidence of Pequot's insider trading involving Microsoft trades to the SEC in a letter on January 2, 2009."SEC Settles with Aguirre"
Government Accountability Project (June 29, 2010) Retrieved February 21, 2011
The morning after Aguirre's FOIA papers were filed, the SEC announced they had filed charges against Pequot and Pequot had agreed to Disgorgement (law), disgorge $18 million in illegal gains and pay $10 million in penalties. A month later, the SEC settled Aguirre's wrongful termination lawsuit for $755,000. The list of officials who have left the SEC for highly lucrative jobs in the private sector and who sometimes have returned to the SEC includes Arthur Levitt, Robert Khuzami, Linda Chatman Thomsen, Richard H. Walker, Gary Lynch and Paul R. Berger. The Project on Government Oversight (POGO) released a report on May 13, 2011, which found that between 2006 and 2010, 219 former SEC employees sought to represent clients before the SEC.Suzanne Barlyn
"DJ Compliance Watch: SEC Plan To Catch Big Fish Questioned"
Dow Jones Newswire (May 16, 2011). Retrieved May 23, 2011

Project on Government Oversight (May 13, 2011). Retrieved May 23, 2011
Former employees filed 789 statements notifying the SEC of their intent to represent outside clients before the commission, some filing within days of leaving the SEC. Reporter Matt Taibbi calls the SEC a classic case of regulatory capture. On August 17, 2011, Taibbi reported that in July 2001, a preliminary fraud investigation against
Deutsche Bank Deutsche Bank AG () is a German multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effo ...

Deutsche Bank
was stymied by Richard H. Walker, then SEC enforcement director, who began working as general counsel for Deutsche Bank in October 2001. Darcy Flynn, an SEC lawyer, the whistleblower who exposed this case also revealed that for 20 years, the SEC had been routinely destroying all documents related to thousands of preliminary inquiries that were closed rather than proceeding to formal investigation. The SEC is legally required to keep files for 25 years and destruction is supposed to be done by the National Archives and Records Administration. The lack of files deprives investigators of possible background when investigating cases involving those firms. Documents were destroyed for inquiries into Bernard Madoff,
Goldman Sachs The Goldman Sachs Group, Inc. () is an American multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as tim ...

Goldman Sachs
, Lehman Brothers, Citigroup, Bank of America and other major Wall Street firms that played key roles in the 2008 financial crisis. The SEC has since changed its policy on destroying those documents and as of August 2011 the SEC investigator general was investigating the matter.


Federal Trade Commission

The decision known as ''In re Amway Corp.'', and popularly called "Amway '79", made the FTC a captive regulator of the nascent multi-level marketing industry. The situation came to a head in December 2012, when hedge fund Pershing Square Capital management announced a $1-billion short position against the company, and evidently expected the FTC to act, which, to date, it has not. From a forensic accounting standpoint, there is no difference between a Ponzi-scheme like the Madoff scandal, and a pyramid scheme, except that in the latter the money is laundered through product sales, not investment. The press has widely reported on why the FTC won't act, e.g. Forbes though legal opinion has been very supportive in some quarters, such as William K. Black, who was instrumental in bringing thousands of criminal prosecutions in the S&L scandal, which was also rife with problems of regulatory capture.


District of Columbia Taxicab Commission

The District of Columbia Taxicab Commission has been criticized for being beholden to taxi companies and drivers rather than ensuring that the district has access to a "safe, comfortable, efficient and affordable taxicab experience in well-equipped vehicles".


Washington State Liquor and Cannabis Board and I-502

Some commentators have acknowledged that while Washington Initiative 502 "legalized" marijuana, it did so in a manner that led to a state-run monopoly on legal marijuana stores with prices far above that of the existing medical dispensaries, which the Washington State Liquor and Cannabis Board is now trying to close down in favor of the recreational stores, where prices are two to five times higher than the product can be obtained elsewhere.


Canada


Canadian Radio-television and Telecommunications Commission

In August 2009, the Canadian Radio-television and Telecommunications Commission (CRTC) provisionally granted a request by Bell Canada to impose usage-based billing on Internet wholesalers, igniting protest from both the wholesalers and consumers, who claimed that the CRTC was "kow-towing to Bell". On February 2, 2011, CRTC chair Konrad von Finckenstein testified before the Canadian House of Commons Standing Committee on Industry, Science and Technology, House of Commons Standing Committee on Industry, Science and Technology to defend the agency's decision. Critic Steve Anderson (open media activist), Steve Anderson said, "The CRTC's stubbornness in the face of a mass public outcry demonstrates the strength of the Big Telecom lobby's influence. While government officials have recognized the need to protect citizens' communications interests, the CRTC has made it clear that their priorities lie elsewhere".


Japan

In Japan, the line may be blurred between the goal of solving a problem and the different goal of making it look as if the problem is being addressed.


Nuclear and Industrial Safety Agency

Despite warnings about its safety, Japanese regulators from the Nuclear and Industrial Safety Agency (NISA) approved a 10-year extension for the oldest of the six Nuclear reactor technology, reactors at Fukushima Daiichi just one month before a 9.0 magnitude 2011 Tōhoku earthquake and tsunami, earthquake and subsequent tsunami damaged reactorsHiroko Tabuchi, Norimitsu Onishi and Ken Belson
"Japan Extended Reactor's Life, Despite Warning"
''The New York Times'' (March 21, 2011). Retrieved March 22, 2011
and caused a Nuclear meltdown, meltdown. The conclusion to the Diet of Japan's report on Fukushima attributed this directly to regulatory capture. Nuclear opponent Eisaku Sato (governor), Eisaku Sato, governor of Fukushima Prefecture from 1988–2006, said a conflict of interest is responsible for NISA's lack of effectiveness as a watchdog. The agency is under the Ministry of Economy, Trade and Industry, which encourages the development of Japan's nuclear industry. Inadequate inspections are reviewed by expert panels drawn primarily from academia and rarely challenge the agency. Critics say the main weakness in Japan's nuclear industry is weak oversight.Norimitsu Onishi and Martin Fackler
"Japanese Officials Ignored or Concealed Dangers"
''The New York Times'' (May 16, 2011). Retrieved May 17, 2011
seismology, Seismologist Takashi Nakata said, "The regulators just rubber-stamp the utilities' reports".Jason Clenfield and Shigeru Sato
"Japan Nuclear Energy Drive Compromised by Conflicts of Interest"
Bloomberg News (December 12, 2007). Retrieved March 22, 2011
Both the ministry and the agency have ties with nuclear plant operators, such as Tokyo Electric. Some former ministry officials have been offered lucrative jobs in a practice called ''amakudari'', "descent from heaven". A panel responsible for re-writing Japan's nuclear safety rules was dominated by experts and advisers from utility companies, said seismology professor Katsuhiko Ishibashi who quit the panel in protest, saying it was rigged and "unscientific". The new guidelines, established in 2006, did not set stringent industry-wide earthquake standards, rather nuclear plant operators were left to do their own inspections to ensure their plants were compliant. In 2008, the NISA found all of Japan's reactors to be in compliance with the new earthquake guidelines. Yoshihiro Kinugasa helped write Japan's nuclear safety rules, later conducted inspections and still in another position at another date, served on a licensing panel, signing off on inspections.


Ministry of Health, Labour and Welfare (MHLW)

In 1996, the Ministry of Health, Labour and Welfare (Japan), Ministry of Health and Welfare (now combined with the Ministry of Labour) came under fire over the HIV-tainted blood scandal (Japan), scandal of HIV-tainted blood being used to treat hemophiliacs.Masao Miyamoto
"Mental Castration, the HIV Scandal, and the Japanese Bureaucracy"
Japan Policy Research Institute (August 1996). Retrieved April 1, 2011
Although warned about HIV contamination of blood products imported from the U.S., the ministry abruptly changed its position on heated and unheated blood products from the U.S., protecting the Green Cross (Japan), Green Cross and the Japanese pharmaceutical industry, keeping the Japanese market from being inundated with heat-treated blood from the United States. Because the unheated blood was not taken off the market, 400 people died and over 3,000 people were infected with HIV. No senior officials were indicted and only one lower-level manager was indicted and convicted.Tomoko Otake
"Ministry insider speaks out"
''Japan Times'' (November 1, 2009). Retrieved April 1, 2011
Critics say the major task of the ministry is the protection of industry, rather than of the population. In addition, bureaucrats get ''amakudari'' jobs at related industries in their field upon retirement, a system which serves to inhibit regulators. Moriyo Kimura, a critic who works at MHLW, says the ministry does not look after the interests of the public.


Philippines

Tobacco control in the Philippines is largely vested in the Inter-Agency Committee on Tobacco (IACT) under Republic Act No. 9211 (Tobacco Regulation Act of 2003). The IACT's membership includes pro-tobacco groups in the Department of Agriculture (Philippines), Department of Agriculture and National Tobacco Administration, as well as "a representative from the Tobacco Industry to be nominated by the legitimate and recognized associations of the industry", the Philippine Tobacco Institute (composed of the largest local cigarette producers and distributors). In a 2015 Philippine Supreme Court case, the Court ruled that the IACT as the "exclusive authority" in regulating various aspects tobacco control including access restrictions and tobacco advertisement, promotion, and sponsorships. In this case, the Department of Health (Philippines), Department of Health, which is the primary technical agency for disease control and prevention, was held to be without authority to create tobacco control regulations unless the IACT delegates this function. The IACT's organization also limits the Philippines' enforcement of the WHO Framework Convention on Tobacco Control, World Health Organization Framework Convention on Tobacco Control.


International


World Trade Organization

The academic Thomas Alured Faunce has argued the World Trade Organization non-violation nullification of benefits claims, particularly when inserted in bilateral trade agreements, can facilitate intense lobbying by industry which can result in effective regulatory capture of large areas of governmental policy.Thomas A. Faunce, Warwick Neville and Anton Wasson
"Non Violation Nullification of Benefit Claims: Opportunities and Dilemmas in a Rule-Based WTO Dispute Settlement System"
(PDF) Peace Palace Library. In M. Bray (Ed.), ''Ten Years of WTO Dispute Settlement: Australian Perspectives''. Office of Trade Negotiations of the Department of Foreign Affairs and Trade. Commonwealth of Australia. Retrieved April 17, 2011


See also

* Campaign finance * Concentrated benefits and diffuse costs * Corporate welfare * Crony capitalism * Inverted totalitarianism * Iron triangle (US politics) * Occupational licensing * Regulator shopping * Regulatory capitalism * Rent seeking * State capture ;Other American groups promoting transparency * MAPLight.org, tracks money and politics in the U.S. * Sunlight Foundation, promotes government transparency and accountability


Notes


References


Further reading

* * Glover, P. 2007
"A Crime Not a Crisis: Why Health Insurance Costs So Much"'
* Huntington, S. 1952. The Marasmus of the ICC: The Commission, the Railroads, and the Public Interest. ''Yale Law Journal'' 614:467-509. * Laffont, J. J., & Tirole, J. 1991
The politics of government decision making. A theory of regulatory capture
''Quarterly Journal of Economics'' 106(4): 1089-1127 * * Levine, M. E., & Forrence, J. L. 1990

''Journal of Law Economics & Organization'' 6: 167-198 * Greg McMahon
Regulatory Capture: Causes and Effects
(PDF) International Institute for Public Ethics. Paper given October 4, 2002 conference, Brisbane, Australia. * * Nakamura, Karen
"Resistance and Co-optation: the Japanese Federation of the Deaf and its Relations with State Power"
''Social Science Japan Journal,'' Vol. 5, No. 1 (April 2002), pp 17–35. * Stigler, G. 1971. The theory of economic regulation. ''Bell J. Econ. Man. Sci''. 2:3-21. * {{conflict of interest Economics of regulation Lobbying Political corruption Public choice theory Ethically disputed political practices Conflict of interest