Regulators often protect the very corporations they are meant to regulate

Evidence

Exemptions to the expanded Volcker Rule give regulators leeway on how to interpret and enforce the rule. Sometimes regulators are lax in their oversight; sometimes they protect the interests of the very corporations they are supposed to regulate. The financial crisis testified to the languid enforcement of existing laws. Morgenson (2013) cites a number of financial authorities who express strong skepticism that regulators are up to the task of vigorously enforcing the modified Volcker Rule. They describe exceptions as large enough to drive a “large truck through.” They call for the establishment of a system to hold regulators accountable, with consequences for deficient regulatory behavior. If lawmakers, some of whom side with financial institutions, provide insufficient staff and funding for regulators to do the job right, they also are responsible for stripping the rule of its regulatory intent. — Albert Bandura, Moral Disengagement, 1550

Categorization

• XREF: Directly instantiates moral disengagement’s systemic mechanism — diffusion of responsibility across regulators, lawmakers, and firms, consistent with the book’s framework so far. — connects to: Corporate water control persists through lawsuits and quietly seizing sources after grassroots wins — Rebecca A. Martusewicz, Jeff Edmundson, and John Lupinacci, EcoJustice Education: Toward Diverse,…, 1526; Industry capture follows from regulators’ incentives and diffuse public interest — Lawrence M. Friedman and Grant M. Hayden, American Law: An Introduction, 584; Regulatory agencies drift toward the interests of the firms they regulate — Lawrence M. Friedman, A History of American Law, 2588