Banks etc. are dishonest and will hide information.
Regulators can, of course, insist that regulated industries provide extensive information, under pain of terrible penalties. What they cannot do is insist that the regulated industries provide information they would like to know but aren’t aware exists. Think of it as a giant game of hide-and-seek in which the seeker has a gun but the hider has the only accurate map of the premises.Regulators are afraid of bankers.
For a banking regulator, unless there’s a financial crisis, the worst negative stimuli is likely to come from angry bankers, not consumers who are outraged about the decision to let Goldman Sachs hold some Santander Brasil stock for a while. This is one big reason that agencies that start out as fierce hawks intent on putting industry in their place end up as docile partners helping the incumbents shut out new competition.Regulators must be friendly to the industry they regulate if they want to cash in later.
The only place where a longtime regulator can get a new job is in the regulated industry. Everyone laments the revolving door. No one proposes a realistic alternative. If you enact a life ban on employment in any regulated industry, you’re essentially telling regulators that staying in their job for longer than a couple of years is the next best thing to a prison sentence.This excuse speaks for itself.
In the real world, regulators are people, too, and people are social animals. They want to be liked.Regulators can't be honest because everyone else is dishonest.
Lobbying. It’s hard to adopt the Conan the Barbarian approach when you know that the boss of the folks you’re talking to is hosting a big fundraising dinner for your ultimate bosses in Congress and the White House.Regulators want to make it easy on themselves.
Over time, the interests of regulators and the interests of incumbents tend to converge upon keeping things nice and tidy by making sure that experienced players dominate the field.McArdle's excuses are similar to her attacks on teachers; they don't work because nobody really wants to work, do they? Extrapolating from personal knowledge, McArdle both excuses away her own laziness, dishonesty and greed and supports her master race from attacks by the peasant lice and scum.