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Interesting; Matt Levine claims the opposite is true, that a revolving door makes regulation harsher.

http://www.bloombergview.com/articles/2014-06-26/strict-regu...

http://www.bloombergview.com/articles/2016-04-12/mortgage-de...

http://www.bloombergview.com/articles/2016-04-14/argentine-b...

Matt Levine's theories nearly all suggest we should end the 'revolving door' because it leads to conflicts of interests - either by making regulation harsher or less harsh, rather than impartial.

If regulators really are harsh so banks hire them "to get them of their backs", presumably banks have an expectation that this works, causing in the long run, softer regulation.

The alternative theory that regulators are incentivised to be diligent and fair so banks will hire them on that basis is... not compatible with most people's understanding of the financial sector's culture.

Then you end up with career bureaucrats who have no idea what is going on regulating banks. Similar think led to crushing regulation in many areas of American life in the 1960's and 1970's. Deregulation of those industries led to innovations like UPS and FedEx that weren't legal before.

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