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Comment by dguaraglia | Hacker News Reader

This explanation is just an attempt at hiding the actual problem: the revolving door between the public and the private sector, specially in the banking industry. Of course you don't want to be the one sending Lloyd Blankfein to prison. No way you are going to get a lofty job at a bank after that.

This is the one case where regulators would have massive popular support, specially in an election year when two very popular candidates (well, three if you believe Hillary's latest statements) are calling for stronger measures against the people responsible for the "Great Recession".

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Would it work if we made the revolving door less attractive?

For instance, could we pay the regulators enough for it to become attractive? Over time, maybe being a regulator will become the end goal of new grads.

Combining higher pay with putting various legal limitations on people who move between the two sides to combat the conflict of interest would certainly help.

Judges typically get paid less than many of the lawyers who argue in front of them, but there's still plenty of lawyers who want to take a paycut to be judges, and not much action in the other direction. Why? Because judges have really high status.

I was thinking that if the regulators are paid more, get a little more power (not sure if they already have enough power) and start to bust some bankers, get some publicity, then that might eventually lead to more status.

Excellent idea, but you run into the "ticket scalping is Bad" mentality.

If anything, the revolving door probably leads to tougher regulation...

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

"Here are some possible theories of the financial-regulatory revolving door:

...

2. Regulators want to get higher-paying jobs at banks, so they try to be diligent, fair, competent and zealous, so that the banks are impressed by them and hire them.

3. Regulators want to get higher-paying jobs at banks, so they are hard on banks in ways that force the banks to hire lots of ex-regulators -- to understand complicated rules, say, or to work as monitors for regulatory settlements.

4. Regulators want to get higher-paying jobs at banks, so they are hard on banks in general, hoping that the banks will hire them to just shut them up."

Banks invest in Ex-regulators. As an ongoing investment, they would expect a payoff.

Also, a bank would prefer to reward the boss or co-workers who fires an over-zealous regulator to rewarding an over zealous regulator.

The whole absurdity you quote reads like something someone else hoping to be hired by a bank would write...

Written by Matt Levine, who has 3x the experience working as Associate and Vice President at Goldman Sachs than he had working in the public sector.

I'm usually pretty skeptical, but reading an article on "how hard regulators are on banks" from someone who worked at Goldman Sachs in the 2007-2011 period, I had to chuckle.

Arnold Kling used to work for one of the housing agencies as an economist. He's on record repeatedly as saying that the Great Recession might as well have been the design goal of housing policy since George Romney.

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