Sheldon Whitehouse stepped into the well of the Senate just after Rep. Joe Barton's ridiculous apology to BP and laid out how deeply "corporate te
June 18, 2010

Sheldon Whitehouse stepped into the well of the Senate just after Rep. Joe Barton's ridiculous apology to BP and laid out how deeply "corporate tentacles" have reached into our regulatory agencies. Unlike Republicans, his argument was not to argue for deregulation, but to remove corporate influence from regulatory agencies and build a wall between them. His argument was remarkable in its simplicity, passion, and truth.

Mr. WHITEHOUSE. The scope, the extent, the insidious nature of corporate influence in regulatory agencies of government--this question of regulatory capture--is something we should attend to here. It is the lesson, and it raises the question beyond the Minerals Management Service: How far does this corporate influence reach into our agencies of government?

The wealth of the international corporate world is staggering. The five biggest oil companies just this quarter posted profits of $23 billion--that is a 23 with 12 zeroes behind it--in just one quarter.

Sen. Whitehouse' example of corporate resources available to influence elections puts it into perspective:

The Republican appointees on the Supreme Court just overturned decades of precedent and 100 years of practice to give these big corporations freedom to spend unlimited funds in our American elections.

Put it to scale. Consider $23 billion of pure profits just in one quarter by big oil, and compare: The Obama and McCain campaigns together spent about $1 billion in the last election. Do the math. For 5 percent of one quarter's profits, big oil could outspend both American Presidential campaigns. That may be some politician's idea of a happy day because that is who they work to please, but it is wrong and it needs to be stopped.

He then looks at how deeply that influence is nestled into our agencies right now:

But think, if that is what corporate influence could do in a national election, think of what those vast, powerful tentacles of corporate influence can do to a little government agency such as the Minerals Management Service: Revolving doors to lucrative jobs in the industry so you are set for life; sports tickets, gifts, drugs; constant, relentless lobbying pressure and threats of litigation; steadily inserting operatives in regulatory positions.

Inch by inch, the tentacles of industry reach further and further into the regulator, until it silently and invisibly comes under industry control and becomes the industry's puppet, until it is serving the special interests and not the public interest.

How it happens:

This is no new phenomenon. Marver Bernstein wrote about regulatory capture more than 50 years ago. He explained that a regulator tends over time to ``become more concerned with the general health of the industry and tries to prevent changes which will adversely affect it,'' to become ``passive toward the public interest.'' This, he said, ``is a problem of ethics and morality as well as administrative method,'' and he called it ``a blow to democratic government and responsible political institutions.''

Ultimately, this leads to what he called ``surrender: the commission finally becomes a captive of the regulated groups.'' If you don't want to go back half a century for a discussion of regulatory capture, look to last week's Wall Street Journal editorial page where a senior fellow at the Cato Institute writes: By all accounts, MMS operated as a rubber stamp for BP.

It is a striking example of regulatory capture: Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public.

After using the MMS as an example of a "captive agency", he launches into one of the most eloquent and passionate arguments I have ever heard for what our government should be, what good government can do for the people who are governed, and what steps we need to take to return to that standard.

This government of ours, founded in a revolution pledging the lives and fortune and sacred honor of those early patriots; this government of ours, which has raised for more than two centuries the promise of freedom in human hearts; this government that lifts its lamp aloft to brighten the darkness of chaos and despair in far distant corners of the globe; this government, whose finely tuned balance, crafted by the Founders, has seen us through Civil War and World War, through westward expansion and Great Depression, through the light bulb and the Model T and the Boeing 747 and the iPod; this government of ours, formed by Washington and Madison, Jefferson and Adams, and led by each of them, and later led by Abraham Lincoln and by Harry Truman and by Theodore Roosevelt and by Franklin Roosevelt and by John Fitzgerald Kennedy; this American Government of ours should never be on its knees before corporate power, no matter how strong. It should never be in the thrall of corporate wealth, no matter how vast.

This American Government of ours should never give the American citizen reason to question whose interests are being served. Never.

In this complex world of ours, government must protect us in remote and specialized precincts of the economy. In those remote precincts, few people are watching, but big money is made. We must be able to trust our government, both in plain view in front of us, and in corners far from sight, to be serving always the public interest, not doing the secret bidding of special interests, of corporate interests because that is where the big money is at stake.

Have we now learned, have we now finally learned, with the financial meltdown and the gulf disaster, the terrible price of all those quietly cut corners? Have we now learned what price must be paid when the stealthy tentacles of corporate influence are allowed to reach into and capture our agencies of government? I pray let us have learned this. Let us have learned that lesson. I sincerely pray we have learned our lesson and that this will never happen again. But let's not just pray.

He concludes with a solution: Clean it up.

In this troubled world, God works through our human hands, grows a more perfect union through our human hearts, creates a beloved community through our human thoughts and ideas. So it is not enough to pray. We must act. We must act in defense of the integrity of this great government of ours, which has brought such light to the world, such freedom and equality to our country.

We cannot allow this government that is a model around the world, that inspires people to risk their lives and fortunes to come to our shores--we cannot allow any element of this government to become the tool of corporate power, the avenue of corporate influence, the puppet of corporate tentacles.

I propose a simple device in this country of laws--not men, of rule of law--and that is to allow our top national law officer, the Attorney General of the United States, to step in and clean house whenever an agency or element of government is no longer credibly independent of the industries and businesses it is intended to regulate.

When a component of government is deemed no longer credibly independent of the corporations or industry it is supposed to regulate, I suggest that the Attorney General be allowed to come in and clean up, hire and fire and take personnel action to ensure the integrity of the personnel; to establish interim regulations and procedures to ensure the integrity of the process; to audit permits and contracts and ensure they were not affected by improper corporate influence, and if they were, to rescind them where they are not in the public interest due to that improper corporate influence; to establish an integrity plan for that component of government, all subject to appropriate judicial review where private rights are affected. Then the Attorney General can get back out, with his or her job done, sort of like an ethics trusteeship or receivership.

And reminds of the damage already done:

If the financial catastrophe and the gulf catastrophe and whatever other catastrophes lurk have any meaning at all, it is that business as usual is no longer enough to stem the tide of corporate influence--insidious, secret corporate influence--in agencies of the U.S. Government. It is an institutional problem--relentless, remorseless, constantly grasping and insinuating corporate influence. It will never go away. It will only worsen as corporations get bigger and richer and more global, and there has to be an institutional mechanism in place to resist it so that it no longer takes a catastrophe to call the failure of governance of an American regulator to proper attention.

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