Regulatory capture occurs when regulatory agencies become dominated by the very industries they were charged with regulating, prompting regulators to advance the goals and interests of those industries. While regulation is necessary and can be done well, it must always be balanced against the potential for unintended consequences that harm the consumers it is intended to protect.

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Additional resources:

Read John B. Taylor’s blog on “Regulatory Capture and Reckless Endangerment,” available here: https://bit.ly/2NpmuHs

Read “Free the Captives” in which Gary S. Becker discusses regulatory capture. Available here: https://hvr.co/2BXCWwz

In “A Comparison of Government Regulation of Risk in the Financial Services and Nuclear Power Industries,” John B. Taylor and Frank A. Wolak examine and compare the problem of safety and soundness regulation in two industries that have dominated the headlines in recent years—nuclear power and financial services. Available here: https://hvr.co/2QzCyIP

Read John B. Taylor’s keynote address, “Simple Rules for Financial Stability.” Available here: https://hvr.co/2ICk1Zq

Read John B. Taylor’s testimony before the Oversight and Investigations Subcommittee of the United States House of Representatives Financial Services Committee, available here: https://hvr.co/2IHWvuc

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