Jump to content

User:Con Belacoski/Regulatory capture in Australia

From Wikipedia, the free encyclopedia

In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities. The agencies are called "captured agencies".

The theory

[edit]

For public choice theorists, regulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting 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.[1] Regulatory capture refers to when this imbalance of focused resources devoted to a particular policy outcome is successful at "capturing" influence with the staff or commission members of the regulatory agency, so that the preferred policy outcomes of the special interest are implemented. For an example of this, see a statement by US Attorney General Richard Olney in the ICC section below.

Regulatory capture theory is a core focus of the branch of public choice referred to as the economics of regulation; 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, one of its main developers.[2]

Likelihood of regulatory capture is a risk to which an agency is exposed by its very nature.[3] This suggests that a regulatory agency should be protected from outside influence as much as possible. Alternatively, it may be better to not create a given agency at all lest the agency become victim, in which case it may serve its regulated subjects rather than those whom the agency was designed to protect. A captured regulatory agency is often worse than no regulation, because it wields the authority of government.

Economic rationale

[edit]

The idea of regulatory capture has an obvious economic basis in that vested interests in an industry have the greatest financial stake in regulatory activity and are more likely to be motivated to influence the regulatory body than dispersed individual consumers,[1] each of whom has little particular incentive to try to influence regulators. When regulators form expert bodies to examine policy, this invariably featured current or former industry members, or at the very least, individuals with contacts in the industry.

Some economists, such as Jon Hanson and his co-authors, argue that the phenomenon extends beyond just political agencies and organizations. Businesses have an incentive to control anything that has power over them, including institutions from the media to academia to popular culture, and thus will try to capture them as well. They call this phenomenon "deep capture."[4]

American examples

[edit]

Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE)

[edit]

In the aftermath of the 2010 Deepwater Horizon oil spill, the Minerals Management Service (MMS), which had had regulatory responsibility for offshore oil drilling, was widely cited as an example of regulatory capture.[5][6] The MMS is now known as the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). The name was changed as part of a re-organization by Ken Salazar, who was sworn into office as the new Secretary of the Interior on the same day the name change was announced.[7] Salazar's appointment was controversial because of his ties to the energy industry.[8] As a senator, Salazar voted against an amendment to repeal tax breaks for ExxonMobil and other major petroleum companies[9] and in 2006, he voted to end protections that limit offshore oil drilling in Florida's Gulf Coast.[10] One of Salazar's immediate tasks was to "[end] the department’s coziness with the industries it regulates"[8] but Daniel R. Patterson, a member of the Arizona House of Representatives, 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.”[8] Indeed, a spokesman for the National Mining Association, which lobbies for the mining industry, praised Salazar, saying that he was not doctrinaire about the use of public lands.[8]

MMS had allowed BP and dozens of other companies to drill in the Gulf of Mexico without first attaining permits to assess threats to endangered species, as required by law.[11] BP and other companies were also given a blanket exemption from having to provide environmental impact statements.[11] The National Oceanic and Atmospheric Administration (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.[11] The letter further accused MMS of highlighting the safety of offshore drilling while understating the risks and impact of spills and playing down the fact that spills had been increasing.[11] Both current and former MMS staff scientists said their reports were overruled and altered if they found high risk of accident or environmental impact.[11] Kieran Suckling, director of the Center for Biological Diversity, 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.”[11]

After the Deepwater accident occurred, Salazar said he would delay granting any further drilling permits, but barely three weeks later, he had issued at least five more permits.[11] In March 2011, BOEMRE began issuing more offshore drilling permits in the Gulf of Mexico.[12] Michael Bromwich, 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.[12]

Commodity Futures Trading Commission (CFTC)

[edit]

In October 2010, George H. Painter, one of the two Commodity Futures Trading Commission administrative law judges, retired and in the process, requested that his cases not be assigned to the other judge, Bruce C. Levine.[13] Painter wrote, "On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor," Painter wrote.[13] "A review of his rulings will confirm that he fulfilled his vow." In further explaining his request, he wrote, "Judge Levine, in the cynical guise of enforcing the rules, forces pro se complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case."[13] Gramm, wife of former Senator Phil Gramm, was accused of helping Goldman Sachs, Enron and other large firms gain influence over the commodity markets. After leaving the CFTC, Gramm joined the board of Enron.[13]

In January and February 2010, independent metals trader Andrew Maguire became a whistleblower[note 1] was when he contacted the CFTC about manipulation of the silver market.[14] On February 3, 2010, Maguire sent e-mails to the CFTC about an example of market manipulation that would take place two days later, describing the two possible scenarios in detail.[15] Two days later, he sent a follow-up e-mail noting that the event had transpired exactly as he had predicted.[15] The CFTC initially showed some interest in Maguire's information, but then stopped replying to his e-mail. After repeated requests for a response, he was sent a one-line e-mail, thanking him for his observations.[14][15] Maguire was not invited to the subsequent CFTC hearing to consider regulating the precious metals market[14] and was even barred from participating.[16] Jeffrey Christian, a former Goldman Sachs employee, testified that gold was traded in "multiples of a hundred times the underlying physical", meaning that each ounce of gold is sold 100 times.[16][17] GATA's Douglas terms the situation "a giant Ponzi scheme".[17] The fraud involved in precious metals markets is in the trillions of dollars, dwarfing all other cases.[14][17]

The CFTC is currently headed by former Goldman Sachs executive, Gary Gensler.[18] CFTC commissioner Bart Chilton supports regulating the precious metals markets.[19] Regulations have been proposed for the energy and metals markets[20] but waivers have been issued and no penalties have been levied against any of the big traders.[21]

Environmental Protection Agency (EPA)

[edit]

Natural gas drilling increased in the United States after the Environmental Protection Agency said in 2004 that hydraulic fracturing, "posed little or no threat" to drinking water.[22] Also known as "fracking", the process was invented by Halliburton in the 1940s.[23] Whistleblower Weston Wilson, says that the EPA's conclusions were "unsupportable" and that five of the seven-member review panel that made the decision had conflicts of interest.[22] A New York Times editorial said the 2004 study "whitewashed the industry and was dismissed by experts as superficial and politically motivated."[23] In 2010, EPA Superfund investigators warned the town of Pavillion, Wyoming not to drink their water after finding benzene, naphthalene, phenols, metals and[24] and noxious chemicals in their water supply.[25] The EPA investigation in Pavillion came after residents complained of discolored water, foul smells and illness in 2008.[24] The EPA recommended that residents use fans while bathing or washing clothes to avoid the risk of explosion.[25] The EPA is currently prohibited by law from regulating fracking, the result of the "Halliburton Loophole", a clause added to the 2005 energy bill at the request of then-vice president Dick Cheney, who was CEO of Halliburton before becoming vice president.[22][23] Legislation to close the loophole and restore the EPA's authority to regulate hydraulic fracturing has been referred to committee in both the House and the Senate.[26][27]

Federal Aviation Administration (FAA)

[edit]

The Federal Aviation Administration has a dual-mandate both to promote aviation and to regulate its safety. A report by the Department of Transportation that found FAA managers had allowed Southwest Airlines 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.[28] The House Transportation and Infrastructure Committee investigated the matter after two FAA whistleblowers, inspectors Charalambe "Bobby" Boutris and Douglas E. Peters, contacted them. Boutris said he attempted to ground Southwest after finding cracks in the fuselage, but was prevented by supervisors he said were friendly with the airline.[29] 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.[29] 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."[29]

On July 22, 2008, a bill was unanimously approved in the House 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.[28] The bill also required rotation of principal maintenance inspectors and stipulated that the word "customer" properly applies to the flying public, not those entitties regulated by the FAA. The FAA was directed to stop calling airlines its "customers".[28][note 2] Southwest was eventually fined $10.2 million for failing to inspect older planes for cracks, according to a 2004 FAA directive.[30]

In September 2009, the FAA administrator issued a directive mandating that the agency use the term "customers" only to refer to the flying public.[31] Prior to the deregulation of the US air industry, the Civil Aeronautics Board served to maintain an oligopoly of US airlines.[32][33]

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."[34]

Federal Communications Commission (FCC)

[edit]

Legal scholars have pointed to the possibility that federal agencies such as the Federal Communications Commission had been captured by media conglomerates. Peter Schuck of Yale University School of Law 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”.[35] 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.[36]

Michael K. Powell, who served on the FCC for eight years and was chairman for four, was appointed president and chief executive officer of the National Cable & Telecommunications Association, a lobby group. As of April 25, 2011, he will be the chief lobbyist and the industry's liaison with Congress, the White House, the FCC and other federal agencies.[37]

Meredith Attwell Baker was one of the FCC commissioners who approved a controversial merger between NBC Universal and Comcast. Four months later, she announced her resignation from the FCC to join Comcast's Washington, D.C. lobbying office.[38] 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 agency for life.[38] Nonetheless, Craig Allen, 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".[38]

Federal Reserve Banking System

[edit]

The Federal Reserve Banking System was created in 1913 to establish a central bank and issue currency, to regulate banks and provide continuity of commercial credit, which would protect from financial panics, unemployment, and business depression. It was also to protect the public from domination by the Money Trust.[39] Critics have long argued that it is too close to the financial industry.[40]

Federal Reserve Bank of New York (New York Fed)

[edit]

The Federal Reserve Bank of New York is the most influential of the Federal Reserve Banking System. Part of the New York Fed's responsibilities is the regulation of 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.[41] While the New York Fed has always had a closer relationship with Wall Street, during the years that Timothy Geithner was president, he became unusually close with the scions of Wall Street banks,[41] a time when banks and hedge funds were pursuing investment strategies that caused the 2008 financial crisis, which the Fed failed to stop.

In the wake of the financial meltdown, Geithner became the "bailout king" of a recovery plan that benefited Wall Street banks at the expense of U.S. taxpayers.[41] Geithner engineered the New York Fed's purchase of $30 billion of credit default swaps from American International Group (AIG), which it had sold to Goldman Sachs, Merrill Lynch, Deutsche Bank and Société Générale. By purchasing these contracts, the banks received a "back-door bailout" of 100 cents on the dollar for the contracts.[42] 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.[42] Geithner defended his use[42] of unprecedented amounts of taxpayer funds to save the banks from their own mistakes,[41] 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 that benefited from AIG's bailout, claiming the information would harm AIG.[42] 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.[42] Jim Rickards calls the bailout a crime and says "the regulatory system has become captive to the banks and the non-banks".[43]

Food and Drug Administration (FDA)

[edit]

The United States Food and Drug Administration has also been accused of acting in the interests of the agricultural, food and pharmaceutical industries (and supporting monopolies) at the expense of consumer health interests. Monsanto's growth hormone, rBGH, which has been linked to cancer in cows and humans,[44] has been banned in numerous countries, but is unlabeled and legal in the United States.[45] Margaret Miller, a former chemical laboratory supervisor at Monsanto,[46] wrote a scientific report that was to be submitted to the FDA to obtain approval of the drug. Shortly before the report was submitted, Miller quit Monsanto to take a job at the FDA, where her first job was to approve the report she had just written while employed at Monsanto.[45][47] Michael R. Taylor, the FDA's deputy commissioner for policy, and a former staff lawyer at Monsanto, where he worked on rGBH legal issues, wrote the FDA's labeling guidelines for rGBH.[44]

Interstate Commerce Commission (ICC)

[edit]

Historians, political scientists, and economists have used the Interstate Commerce Commission, 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 joined the Grover Cleveland administration as attorney general not long after the ICC was established. Olney, formerly a prominent railroad lawyer, was asked if he could do something to get rid of the ICC.[5] He replied, "The Commission… is, or can be made, of great use to the railroads. It satisfies the popular clamor for a government supervision of the railroads, at the same time that that supervision is almost entirely nominal. Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things.… The part of wisdom is not to destroy the Commission, but to utilize it."[5] The Commission was later accused of acting in the interests of railroads and trucking companies. The ICC, critics claimed, set rates at artificially high levels and excluded new competitors through a restrictive permitting process.[48]

Nuclear Regulatory Commission (NRC)

[edit]

Anti-nuclear activists have accused the Nuclear Regulatory Commission of being captured by utilities operating nuclear power plants.

Then-candidate 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.[49]

The NRC has given a license to every single reactor requesting one, prompting Greenpeace USA nuclear policy analyst Jim Riccio to refer to the agency approval process as a "rubber stamp".[50] In Vermont, ten days after[51] the 2011 Tōhoku earthquake and tsunami that damaged Japan's Daiichi plant in Fukushima, the NRC approved a 20-year extension for the license of Vermont Yankee Nuclear Power Plant, although the Vermont state legislature had voted overwhelmingly to deny such an extension.[50] The Vermont plant uses the same reactor design as the Fukushima Daiichi plant.[50] The plant had been found to be leaking radioactive materials through a network of underground pipes, which Entergy, the company running the plant, had denied under oath even existed. Representative Tony Klein, who chaired the 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.[50] 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.[52] 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."[53]

There have also been instances of a revolving door. Jeffrey Merrifield, who was on the NRC from 1997 to 2008 and was appointed by presidents Clinton and Bush, left the NRC to take an executive position at The Shaw Group,[50] which has a nuclear division regulated by the NRC.[note 3]

A year-long Associated Press (AP) investigation showed that the NRC, working with the industry, has relaxed regulations so that aging reactors can remain in operation.[54] 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.[54] The NRC repeatedly granted the industry permission to delay repairs and problems often grew worse before they were fixed.[54][note 4]

Office of the Comptroller of the Currency (OCC)

[edit]

The Office of the Comptroller of the Currency has strongly opposed the efforts of the 50 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 as evidence that the OCC is "a captive of the banks it is supposed to regulate".[55]

Securities and Exchange Commission (SEC)

[edit]

The United States Securities and Exchange Commission has also been accused of acting in the interests of Wall Street banks and hedge funds and of dragging its feet or refusing to investigate cases or bring charges for fraud and insider trading.[56] 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."[57] 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 titan John Mack. Mack was suspected of giving insider information to Arthur J. Samberg, head of Pequot Capital Management,[58] once one of the world's largest hedge funds.[59] After more than four years, of legal battles, former SEC investigator Gary J. Aguirre filed papers in an 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.[60] The morning after Aguirre's FOIA papers were filed,[60] the SEC announced they had filed charges against Pequot and Pequot had agreed to disgorge $18 million in illegal gains and pay $10 million in penalties.[59][61] A month later, the SEC settled Aguirre's wrongful termination lawsuit for $755,000.[62]

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,[63] Linda Chatman Thomsen,[64] Richard H. Walker,[65] Gary Lynch[66] and Paul R. Berger.[67] 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.[68][69] 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.[68][69]

Reporter Matt Taibbi calls the SEC a classic case of regulatory capture[70] and the SEC has been described as an agency that was set up to protect the public from Wall Street, but now protects Wall Street from the public.[71] On August 17, 2011, Taibbi reported that in July 2001, a preliminary fraud investigation against 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, 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 the SEC investigator general is investigating the matter.[72][73]

Canadian examples

[edit]

Canadian Radio-television and Telecommunications Commission (CRTC)

[edit]

In August 2009, the 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".[74]

On February 2, 2011, CRTC chair Konrad von Finckenstein testified before parliament's Standing Committee on Industry, Science and Technology and justified the agency's decision. Critic 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."[75] Other companies said to have influence over CRTC are Rogers Communications, Telus, Shaw Communications and Videotron.[citation needed]

International examples

[edit]

World Trade Organization (WTO)

[edit]

The academic Thomas Alured Faunce has argued the World Trade Organisation 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.[76]

Japanese examples

[edit]

In Japan, the line may be blurred between the goal of solving a problem and the somewhat different goal of making it look as if the problem is being addressed.[77]

Nuclear and Industrial Safety Agency (NISA)

[edit]

Despite warnings about its safety, Japanese regulators from the Nuclear and Industrial Safety Agency approved a 10-year extension for the oldest of the six reactors at Fukushima Daiichi just one month before a 9.0 magnitude earthquake and subsequent tsunami damaged reactors[78] and caused a meltdown. Nuclear opponent[79] 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.[78] 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.[78] Critics say the main weakness in Japan's nuclear industry is weak oversight.[80] Seismologist Takashi Nakata said, "The regulators just rubber-stamp the utilities' reports."[81]

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".[78][80] A panel responsible for re-writing Japan's nuclear safety rules was dominated by experts and advisers from utility companies,[80] said seismology professor Katsuhiko Ishibashi who quit the panel in protest, saying it was rigged and "unscientific".[81] 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.[80] In 2008, the NISA found all of Japan's reactors to be in compliance with the new earthquake guidelines.[80]

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.[81]

Ministry of Health, Labour and Welfare (MHLW)

[edit]

In 1996, the Ministry of Health and Welfare (now combined with the Ministry of Labour) came under fire over the scandal of HIV-tainted blood being used to treat hemophiliacs.[82] 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 Green Cross and the Japanese pharmaceutical industry by keeping the Japanese market from being inundated with heat-treated blood from the United States.[82] Because the unheated blood not taken off the market, 400 people died and over 3,000 people were infected with HIV.[82] No senior officials were indicted and only one lower-level manager was indicted and convicted.[83] Critics say the major task of the ministry is the protection of industry, rather than of the population.[82] In addition, bureaucrats get amakudari jobs at related industries in their field upon retirement, a system which serves to inhibit regulators.[82] Moriyo Kimura, a critic who works at MHLW, says the ministry does not look after the interests of the public.[83]

Australian examples

[edit]

The current establishment of a national rail safety regulator in Australia contains many of the features of a regulatory


Quotes

[edit]

In 1913 Woodrow Wilson wrote, "If the government is to tell big business men how to run their business, then don't you see that big business men have to get closer to the government even than they are now? Don't you see that they must capture the government, in order not to be restrained too much by it? Must capture the government? They have already captured it."[84]

At a January 2010 hearing of the House Committee on Oversight and Government Reform, U.S. Representative Marcy Kaptur told former president of the New York Fed and current Secretary of the Treasury, Timothy Geithner, “A lot of people think that the president of the New York Fed works for the U.S. government. But in fact you work for the private banks that elected you.”[42]

In a May 2011 article entitled, "Why CEOs Avoided Getting Busted in Meltdown", former Savings and Loan regulator William K. Black wrote, "The defining characteristic of crony capitalism is the ability of favored elites to loot with impunity and the failure of regulators to do their jobs."[85]

In a June 2011 article by the Associated Press, nuclear engineer Paul Blanch said, "It's a philosophical position that [NRC regulators] take that's driven by the industry and by the economics: What do we need to do to let those plants continue to operate? They somehow sharpen their pencil to either modify their interpretation of the regulations, or they modify their assumptions in the risk assessment."[54]

See also

[edit]
Literature
Other American groups promoting transparency

Footnotes

[edit]
  1. ^ Maguire and Adrian Douglas of the Gold Anti-Trust Action Committee, had several interviews scheduled, but all were cancelled, except an audio interview at King World News. The day after Maguire was identified as the informant at the CFTC hearing, he and his wife were victims of a hit-and-run accident and the King World News website was subjected to a distributed denial of service attack. Maguire and his wife were injured, but not seriously. (See the article at Deep Capture.)
  2. ^ The bill was introduced in the Senate as S. 3440 by Senator Olympia Snowe on August 1, 2008. It was read twice and sent to committee.
  3. ^ 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)
  4. ^ 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 an 20 additional years and another 16 renewal applications are under review.

References

[edit]
  1. ^ a b Timothy B. Lee, "Entangling the Web" The New York Times (August 3, 2006). Retrieved April 1, 2011
  2. ^ Edmund Amann (Ed.), Regulating Development: Evidence from Africa and Latin America Google Books. Edward Elgar Publishing (2006), p. 14. ISBN 978-1-84542-499-2. Retrieved April 14, 2011
  3. ^ Gary Adams, Sharon Hayes, Stuart Weierter and John Boyd, "Regulatory Capture: Managing the Risk" ICE Australia, International Conferences and Events (PDF) {October 24, 2007). Retrieved April 14, 2011
  4. ^ Jon D. Hanson and David G. Yosifon, The Situation: An Introduction to the Situational Character, Critical Realism, Power Economics, and Deep Capture Abstract at Social Science Research Network. University of Pennsylvania Law Review, Vol. 152, p. 129 (2003-2004); Santa Clara University Legal Studies Research Paper No. 06-17; Harvard Public Law Working Paper No. 08-32. Retrieved April 12, 2011
  5. ^ a b c Thomas Frank, "Obama and 'Regulatory Capture'" The Wall Street Journal (June 24, 2010). Retrieved April 5, 2011
  6. ^ O'Driscoll, Gerald (12 June 2010). "The Gulf Spill, the Financial Crisis and Government Failure". The Wall Street Journal.
  7. ^ "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
  8. ^ a b c d John M. Broder, "Environmentalists Wary of Obama’s Interior Pick" The New York Times (December 17, 2008). Retrieved April 8, 2011
  9. ^ "2005 "National Environmental Scorecard" (PDF) League of Conservation Voters
  10. ^ "2006 National Environmental Scorecard" (PDF) League of Conservation Voters
  11. ^ a b c d e f g Ian Urbina, "U.S. Said to Allow Drilling Without Needed Permits" The New York Times (May 13, 2010). Retrieved April 8, 2011
  12. ^ a b Ryan Dezember, "U.S. to Issue More Gulf Drilling Permits" The Wall Street Journal (March 22, 2011). Retrieved April 8, 2011
  13. ^ a b c d David S. Hilzenrath, "Commodity Futures Trading Commission judge says colleague biased against complainants" The Washington Post (October 19, 2010). Retrieved May 4, 2011
  14. ^ a b c d Radio interview with Andrew Maguire and Adrian Douglas King World News (March 30, 2010). Retrieved May 4, 2011
  15. ^ a b c E-mail exchange between Maguire and the CFTC King World News (January 26, 2010 - February 9, 2010). Retrieved May 4, 2011
  16. ^ a b "Manipulating Gold and Silver: A Criminal Naked Short Position that Could Wreck the Economy" DeepCapture.com (April 2, 2010). Retrieved May 4, 2011
  17. ^ a b c Tyler Durden, "Former Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market Is "Paper Gold" Ponzi" Zero Hedge (March 28, 2010). Retrieved May 4, 2011
  18. ^ Ben Protess, "U.S. Regulators Face Budget Pinch as Mandates Widen" The New York Times (May 3, 2011). Retrieved May 4, 2011
  19. ^ Frank Tang and Christopher Doering, "Odds stacked against CFTC metals position limits" Reuters (March 23, 2010). Retrieved May 4, 2011
  20. ^ Daniel P. Collins, "CFTC Puts Position Limits On Logic" Futures Magazine (April 1, 2011). Retrieved May 4, 2011
  21. ^ William D. Cohan, "A Conspiracy With a Silver Lining" The New York Times (March 2, 2011). Retrieved May 7, 2011
  22. ^ a b c Barry Estabrook, "How gas drilling contaminates your food" Salon.com (May 18, 2011). Retrieved May 19, 2011
  23. ^ a b c NYT editorial: "The Halliburton Loophole" The New York Times (November 2, 2009). Retrieved May 19, 2011
  24. ^ a b Abrahm Lustgarten, "Feds Warn Residents Near Wyoming Gas Drilling Sites Not to Drink Their Water" ProPublica (September 1, 2010). Retrieved May 19, 2011
  25. ^ a b Nicholas Kusnetz, "Wyoming Fracking Rules Would Disclose Drilling Chemicals" ProPublica (September 14, 2010). Retrieved May 19, 2011
  26. ^ "H.R. 1084: Fracturing Responsibility and Awareness of Chemicals Act of 2011" govtrack.us Retrieved May 19, 2011
  27. ^ "S. 1215: Fracturing Responsibility and Awareness of Chemicals (FRAC) Act" govtrack.us Retrieved May 19, 2011
  28. ^ a b c Paul Lowe, "Bill proposes distance between airlines and FAA regulators" AINonline.com (September 1, 2008). Retrieved April 11, 2011
  29. ^ a b c Johanna Neuman, "FAA's 'culture of coziness' targeted in airline safety hearing" Los Angeles Times (April 3, 2008). Retrieved April 11, 2011
  30. ^ David Koenig, "Southwest Airlines faces $10.2 million fine" Mail Tribune, Associated Press (March 6, 2008). Retrieved April 11, 2011
  31. ^ "FAA will stop calling airlines 'customers'" Reuters, USA Today (September 18, 2009). Retrieved October 17, 2009
  32. ^ Roger A. Arnold, Economics Google Books. Thomson South-Western, 8th edition (2008) p. 497. ISBN 978-0-324-53801-4. Retrieved April 12, 2011
  33. ^ Lori Alden, "Why are some firms more profitable than others?" econoclass.com (2007). Retrieved April 12, 2011
  34. ^ Steven M. Davidoff, "The Government’s Elite and Regulatory Capture" The New York Times (June 11, 2010). Retrieved April 11, 2011
  35. ^ Travis, Hannibal (2007). "Of Blogs, eBooks, and Broadband: Access to Digital Media as a First Amendment Right". Hofstra Law Review, Vol. 35, p. 148. President and Trustees of Hofstra University in Long Island, New York, quoting Peter H. Shuck, The Politics of Regulation, 90 YALE L.J. 702, 707-10 (1981) (book review). Retrieved June 4, 2010.
  36. ^ Travis, Hannibal (2007). "Of Blogs, eBooks, and Broadband: Access to Digital Media as a First Amendment Right". Hofstra Law Review, Vol. 35, p. 152. President and Trustees of Hofstra University in Long Island, New York, citing Red Lion Broad. Co. v. FCC, 395 U.S. 367, 389, 396 (1969). Retrieved June 4, 2010.
  37. ^ "Regulatory Capture in Action" Robert Paterson, blog (March 15, 2011). Retrieved April 12, 2011
  38. ^ a b c Edward Wyatt, "F.C.C. Commissioner Leaving to Join Comcast" The New York Times (May 11, 2011). Retrieved May 12, 2011
  39. ^ Carter Glass, "Changes in the Banking and Currency System of the United States" (PDF) House Report No. 69, 63d Congress to accompany H.R. 7837, submitted to the full House by Carter Glass, from the U.S. House Committee on Banking and Currency (September 9, 1913) pp. 3-11. Retrieved April 11, 2011
  40. ^ Kristina Cooke, Pedro da Costa and Emily Flitter, "Special Report: The ties that bind at the Federal Reserve" Reuters (September 30, 2010). Retrieved May 7, 2011
  41. ^ a b c d Jo Becker and Gretchen Morgenson, "Geithner, Member and Overseer of Finance Club" The New York Times (April 26, 2009). Retrieved April 11, 2011
  42. ^ a b c d e f David Reilly, "Secret Banking Cabal Emerges From AIG Shadows" Bloomberg (January 29, 2010). Retrieved April 11, 2011
  43. ^ Eric King, Part II, Interview with Jim Rickards King World News (December 7, 2010). Retrieved May 14, 2011
  44. ^ a b Jennifer Ferrara, "Revolving Doors: Monsanto and the Regulators" Republished with permission from The Ecologist (September/October 1998). Retrieved April 4, 2011
  45. ^ a b "Monsanto, FDA, U.S. Government: Connections" Annie Appleseed Project. Retrieved April 4, 2011
  46. ^ "Lies and Deception: How the FDA Does Not Protect Your Best Interests" Smart Publications: Clarifying the Complex World of Nutrition Science. Retrieved April 4, 2011
  47. ^ "Lies and Deception: How the FDA Does Not Protect Your Best Interests" Smart Publications: Clarifying the Complex World of Nutrition Science. Retrieved April 4, 2011
  48. ^ Free to Choose, Milton Friedman
  49. ^ Justin Elliott, "Ex-regulator flacking for pro-nuke lobby" Salon.com (March 17, 2011). Retrieved March 18, 2011
  50. ^ a b c d e Kate Sheppard, "Is the Government's Nuclear Regulator Up to the Job?" Mother Jones (March 17, 2011). Retrieved March 18, 2011
  51. ^ "Vermont Yankee Nuclear Power Station-License Renewal" NRC, official website. Retrieved April 04, 2011
  52. ^ Jia Lynn Yang, "Democrats step up pressure on nuclear regulators over disaster preparedness" The Washington Post (March 18, 2011). Retrieved March 19, 2011
  53. ^ Eric Lichtblau, "Lobbyists’ Long Effort to Revive Nuclear Industry Faces New Test" The New York Times (March 24, 2011). Retrieved March 25, 2011
  54. ^ a b c d Jeff Donn, "U.S. nuclear regulators weaken safety rules" Salon.com (June 20, 2011). Retrieved June 20, 2011
  55. ^ Joe Nocera, "An Advocate Who Scares Republicans" The New York Times (March 18, 2011). Retrieved March 19, 2011
  56. ^ Matt Taibbi, "Why Isn't Wall Street in Jail?" Rolling Stone (February 16, 2011). Retrieved March 3, 2011
  57. ^ "Madoff Whistleblower Markopolos Blasts SEC" Bloomberg News (June 5, 2009). Retrieved March 29, 2011
  58. ^ "Gary J. Aguirre v. Securities and Exchange Commission, Civil Action No. 06-1260 (ESH)" United States District Court for the District of Columbia (April 28, 2008). Google Scholar. Retrieved March 1, 2011
  59. ^ a b "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
  60. ^ a b "SEC Settles with Aguirre" Government Accountability Project (June 29, 2010) Retrieved February 21, 2011
  61. ^ "SEC Charges Pequot Capital Management and CEO Arthur Samberg With Insider Trading" U.S. Securities and Exchange Commission press release (May 27, 2010). Retrieved March 3, 2011
  62. ^ Gretchen Morgenson, "SEC Settles With a Former Lawyer" The New York Times (June 29, 2010). Retrieved February 21, 2011
  63. ^ "Robert Khuzami Named SEC Director of Enforcement" U.S. Securities and Exchange Commission Press Release (February 19, 2009) Retrieved January 9, 2011
  64. ^ Kara Scannell, "Davis Polk Recruits Ex-SEC Aide" The Wall Street Journal (April 13, 2009) Retrieved February 26, 2011
  65. ^ "Deutsche Bank Hires Former S.E.C. Official" The New York Times (October 2, 2001). Retrieved March 4, 2011
  66. ^ Reed Abelson, "Gary Lynch, Defender of Companies, Has His Critics" The New York Times (September 3, 1996). Retrieved March 4, 2011
  67. ^ Walt Bogdanich and Gretchen Morgenson, "S.E.C. Inquiry on Hedge Fund Draws Scrutiny" The New York Times (October 22, 2006) Retrieved March 4, 2011
  68. ^ a b Suzanne Barlyn, "DJ Compliance Watch: SEC Plan To Catch Big Fish Questioned" Dow Jones Newswire (May 16, 2011). Retrieved May 23, 2011
  69. ^ a b "Revolving Regulators: SEC Faces Ethic Challenges with Revolving Door" Project on Government Oversight (May 13, 2011). Retrieved May 23, 2011
  70. ^ Matt Taibbi interviewed on his article, "Why isn't Wall Street in jail?" Democracy Now! Video and transcript. (February 22, 2011). Retrieved March 4, 2011
  71. ^ Don Bauder, "Gary Aguirre Major Source in Taibbi Blockbuster" San Diego Reader blog post (February 17, 2011). Retrieved February 19, 2011
  72. ^ Matt Taibbi, "Is the SEC Covering Up Wall Street Crimes?" Rolling Stone (August 17, 2011). Retrieved August 19, 2011
  73. ^ Edward Wyatt, "S.E.C. Files Were Illegally Destroyed, Lawyer Says" The New York Times (August 17, 2011). Retrieved August 19, 2011
  74. ^ "CRTC wants internet pricing answers from Bell" CBC News (August 24, 2009). Retrieved April 5, 2011
  75. ^ "CRTC Chair Defends UBB Decision at Industry Committee Meeting amidst Backlash" OpenMedia.ca (February 3, 2011). Retrieved April 4, 2011
  76. ^ 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
  77. ^ 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), p 19 (PDF 3 of 20).
  78. ^ a b c d Hiroko Tabuchi, Norimitsu Onishi and Ken Belson, "Japan Extended Reactor’s Life, Despite Warning" The New York Times (March 21, 2011). Retrieved March 22, 2011
  79. ^ "Comments by Fukushima Prefecture Governor Eisaku Sato Concerning Japan’s Pluthermal (MOX fuel utilization) Program and the Nuclear Fuel Cycle" Green Action (June 4–5, 2002). Retrieved March 22, 2011
  80. ^ a b c d e Norimitsu Onishi and Martin Fackler, "Japanese Officials Ignored or Concealed Dangers" The New York Times (May 16, 2011). Retrieved May 17, 2011
  81. ^ a b c Jason Clenfield and Shigeru Sato, "Japan Nuclear Energy Drive Compromised by Conflicts of Interest" Bloomberg News (December 12, 2007). Retrieved March 22, 2011
  82. ^ a b c d e Masao Miyamoto, "Mental Castration, the HIV Scandal, and the Japanese Bureaucracy" Japan Policy Research Institute (August 1996). Retrieved April 1, 2011
  83. ^ a b Tomoko Otake, "Ministry insider speaks out" Japan Times (November 1, 2009). Retrieved April 1, 2011
  84. ^ Woodrow Wilson, The New Freedom: A Call For the Emancipation of the Generous Energies of a People
  85. ^ "Why CEOs Avoided Getting Busted in Meltdown" Businessweek (May 10, 2011). Retrieved May 14, 2011

Bibliography

[edit]
[edit]