Let's be real here. Banking isn't medicine or rocket science.
The IRS and State Tax departments seem to figure out how to author, enforce, audit and interpret complex regulation without the brilliant insight of investment bankers.
The IRS tax code is quite possibly the worst example to use, if you are trying to point to well written regulation. Almost 74,000 pages of tax code. [1]
Though I agree that investment banking advice would be irrelevant here.
I think it's very apropos -- I never claimed it was good.
The point is that the tax authorities, despite not practicing in any of a thousand different business practices is somehow able to effective police tax collection. The notion that banking is somehow so magically complex that government employees can't figure it out is ridiculous.
I don't know, is it preferable to have cops who are ex-Mafia on the grounds that they "just know more about crime"?
"Regulation" is a polite word, so it's easy to lose track of what it really means. But what it really means is policing. Contrary to what the Republicans tell you, ours is not a planned economy in which government bureaucrats are making operational decisions. This isn't the Soviet Union, and they don't exist to govern the allocation of the shoe supply. Generally speaking, regulations is capitalist economies are about limiting the otherwise limitless appetite for profit by imposing extraordinarily high costs on harmful, reckless, and otherwise predatory behavior.
If regulators want to retain outside consultants from an industry that's one thing - especially if the people they're hiring are whistleblowers who can be relied on to have no further employment with the people they busted. It's when industry starts hiring ex-regulators that things get really sticky.
>"Regulation" is a polite word, so it's easy to lose track of what it really means. But what it really means is policing.
The FCC polices the tv/radio/satellite/cable industry, but it also writes regulations that affect the business.
It is preferable to have a head of FCC with industry knowledge. Having industry experience does not automatically make one corrupt or criminal, which seems to be your line of thinking.
>Contrary to what the Republicans tell you, ours is not a planned economy in which government bureaucrats are making operational decisions.
Ours is not a centrally planned economy, but regulators can still enact policies that positively or negatively affect how an industry functions.
There's this strange underlying strata in your argument, in that it seems to allude that people
1) Can't be effective regulators without having learned or interacted with private business
2) it is natural to expect people to head to private practice, and there aren't some people who enjoy serving the nation.
Finally - as an unrelated point to the above - relations between regs and private entities are dynamic systems. At the moment they are likely too cushy and they need to be further apart.
At other times or in other eras, the regulators are too far apart from business to understand best practices.
Given the evidence, and the fact that regulatory capture is occurring at multiple levels, it seems apparent an arms length approach is required.
As I said, generally speaking. Obviously, there are exceptions - like the FCC - that stand out for one unique reason or another (directly managing a publicly-held resource like the wireless spectrum, for instance, or the Dept. of the Interior, which issues oil and gas leases).
And I'm not saying that having industry experience by itself is a problem - although it can be with shadier lines of work. No, it becomes a problem when people can ping-pong back and forth between rule making and profit making roles in the same sector. The worst of it is seen not in people coming from the private sector, but from people going to the private sector - frequently to collect their rewards for having exercised a "light touch" when they were with the government.
That's the point at which a big salary for a cushy gig looks less like compensation for the job you're doing now, and more like a reward for the job you didn't do as a regulator.
