Summary: Economists have been writing for decades about "regulatory capture" -- the idea that regulators are "captured" by the industry they're supposed to be watching over, and wind up serving industry's interests. In a famous paper published in 1971, the economist George Stigler wrote: ...as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit. That notion still holds sway. In the years leading up to the savings and loan crisis of the late '80s and early '90s, for example, the industry persuaded Congress to make the regulations more lenient. A decade later, Congress went along with another industry push to leave many derivatives largely unregulated, and to allow consolidation in the finance industry.
