, Columnist
Strict Regulation Makes the Revolving Door Spin Faster
Why would you want to hire a nice regulator? Their highest and best use is to remain a nice regulator.
Here are some possible theories of the financial-regulatory revolving door:
Theory 1 is a popular favorite, but it seems so dull and unimaginative. Like: If you have a lazy friendly regulator who doesn't make you do too much, doesn't enforce the rules too strictly, doesn't look too hard at your activities, doesn't get angry when you break the law, bakes you cookies whenever you meet ... why would you hire him? What would he do for you? The theory is, what, you'll create a good long-term incentive for his replacement? I don't know. If you have an easy regulator, you already have what you want. Why hire him away from the regulator and run the risk that his replacement will be a terror?