2012
Chapter
Making of Good Financial Regulation: Towards a Policy Response to Regulatory Capture

Lessons for the Financial Sector from 'Preventing Regulatory Capture: Special Interest Influence, and How to Limit It'

By: Daniel Carpenter, David Moss and Melanie Wachtell Stinnett

Format:Print
| Pages:15

Abstract

In the wake of the global financial crisis of 2007–09, regulatory capture has become at once a diagnosis and a source of discomfort. The word “capture” has been used by dozens upon dozens of authors—ranging from pundits and bloggers to journalists and leading scholars—as the tell-tale characterization of the regulatory failures that permitted the crisis. In addition, critics who doubt whether regulatory reforms will be sufficient draw upon capture as a source of widespread scepticism (if not despair) that nothing real can be changed. Seen this way, capture of financial regulation appears not only as a significant cause of the crisis, but also as a constraint upon any realistic solutions. Most of those solutions will, in this view, be watered down or dashed by captured regulators in the future.

Keywords

Regulatory Capture; Governing Rules, Regulations, and Reforms; Financial Crisis

Citation

Carpenter, Daniel, David Moss, and Melanie Wachtell Stinnett. "Lessons for the Financial Sector from 'Preventing Regulatory Capture: Special Interest Influence, and How to Limit It'." Chap. 3 in Making of Good Financial Regulation: Towards a Policy Response to Regulatory Capture, edited by Stefano Pagliari, 70–84. Grosvenor House Publishing Limited, 2012.