Financial Regulations and Capture …


The new financial regulatory agencies created by Congress, as well as the Federal Reserve, Commodity Futures Trading Commission, and the SEC, have some new rules to make thanks to recent legislation.   The newly created Consumer Financial Protection Bureau and the Financial Stability Oversight Council both have a total of about 80 new regulations to create, the Federal Reserve has 54, the CFTC about 61, and the SEC 95.

These new rules, however, won’t stop the financial companies from lobbying the existing and newly created agencies.  They will attempt to mitigate any harm done to their own firms from the regulation and will likely also get favors or exemptions from the new regulations, giving them an edge on the competition.  In the mighty words of Nobel laureate George Stigler, who was the main pioneer of the idea of regulatory capture:

Regulation and competition are rhetorical friends and deadly enemies: over the doorway of every regulatory agency … should be carved: Competition not admitted.

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One thought on “Financial Regulations and Capture …

  1. Were you bored in July and had nothing to do? Might be wise to go out and make a little money or get that doctorate done a little sooner rather than post all this.

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