Judge Richard Posner has an op-ed piece in today's New York Times about financial regulation. He writes that the "pathologies of regulation" are "rooted in our regulatory culture — the timidity of civil servants, the contamination of public administration by politics and interest groups."
On the contrary, the American "regulatory culture" is, at least in the way it is set up, pretty well insulated from politics. Some might argue that such insulation is part of the problem, because it leaves the regulators unaccountable. Governors of the Federal Reserve, for example, are appointed for 14-year terms, during which they "may not be removed from office for their policy views." Only a federal judge like Mr. Posner, who has a lifetime term, can claim that that is a set-up that is contaminated by politics. The idea that politics are a source of contamination rather than a source of democratic strength betrays a bias in favor of unelected bureaucrats. Just to underscore how apolitical our current regulatory system is, consider that President Obama's Treasury Secretary, Timothy Geithner, also played a leading role in handling the financial crisis during the Bush administration, and Mr. Obama's head of the Federal Deposit Insurance Corporation, Sheila Bair, is also a Bush administration holdover. The vast majority of the personnel at the regulatory agencies are career civil servants, not political appointees.
Meanwhile, while complaining about "the contamination of public administration by politics," Mr. Posner goes on in practically the next breath to suggest a move to "finance regulatory agencies by Congressional appropriation rather than by fees paid by the firms they oversee." It's hard to see how giving Congress control of the budgets of the regulatory agencies would lessen "the contamination of public administration by politics."
