Regulating the Regulators

By Dawn Lim

The former Minerals Management Service has a new boss and a new name -- Michael Bromwich, and the Bureau of Ocean Energy Management, Regulation and Enforcement, respectively. A "well-deserved death" to an agency known for its "unusually egregious" behavior, James Surowiecki wrote in the June 14 issue of the New Yorker.

But the recent Deepwater Horizon oil spill wasn't an isolated example of inept -- or nonexistent -- federal regulation, Surowiecki charges.

"The obvious problems of graft and the revolving door between government and industry, in other words, were really symptoms of a more fundamental pathology: regulation itself became delegitimatized, seen as little more than the tool of Washington busybodies. This view was exacerbated by the way regulation works in the U.S. Too many regulators, for instance, are political appointees, instead of civil servants. This erodes the kind of institutional identity that helps create esprit de corps, and often leads to politics trumping policy."

The solution? Elevate the status of federal regulators, according to Surowiecki. "That doesn't mean that the government needs to start putting out 'Men of the SEC' calendars, but it does need to instill in regulators the sense that their actions matter."