By Tim Devaney - 01/30/14 03:03 PM EST
All too often, federal regulators are “captured” by industry and special interest groups that improperly influence the rules they make, Sen. Sheldon Whitehouse (D-R.I.) warned Thursday.
Regulatory capture, Whitehouse said during a speech at the left-leaning Center for American Progress, is a “threat to the integrity of our government.”
Whitehouse pointed to the recent financial crisis as an example, where he said the Securities and Exchange Commission fell “asleep at the switch” on Wall Street.
“It remains remarkable to me how little attention has been paid by Congress,” he said.
Whitehouse called for the White House to establish a task force that “prowls the government” looking for signs of regulatory capture, which is not always easy to spot, he said.
“Regulatory capture is done in the dark, done as invisible as possible,” Whitehouse said. “No one puts a flag up saying, 'This is the agency I have captured.’ ”
The late economist George Stigler first proposed the idea of regulatory capture, which is said to happen when an agency is dominated by an industry it is supposed to regulate. While the agency was formed to make rules that protect the public's interest, it instead sides with special interest groups.