Basically, regulatory capture, essentially means that the implementation of federal regulation upon a given industry, has in effect, been “ captured” by the very companies that are being regulated, so as to favor those corporations through the process of, for instance, those that are doing the regulating and/or the legislation of the laws that applied to such being, in effect, regulated by industry insiders, or adherents to that industry, or lobbyists working on behalf of that industry. In other words, regulatory capture occurs whenever the regulators aren’t truly independent agents working on behalf of the government, but rather are well-versed industry insiders that have switched hats so as to thus implement toothless regulation, as well as to see that such regulations are enforced in such a way, that it benefits that industry, specifically; or, we so find that regulatory capture occurs through the lobbying efforts of the lobbyists in a manner in which the legislation is amended or enforced in a way that benefits that industry, at the expense of the public good.
The regulation of industry, is basically a lawful process in which the public believes that a given industry is thus subject to some necessary and prudent regulation – but in reality, some of those companies subject to such regulation, have essentially captured the regulatory body in such a way, that their business model will not be negatively impacted, or if not completely successful in doing so, mitigates such to the degree that such impacts their business model, only marginally.
When it comes to regulation, it has to be remembered, that those that are the executives of these mega corporations, as well as those that are its stockholders, that they demand to have a good return on their investment -- so that these particular people are extremely motivated to accomplish whatever needs to be accomplished to be successful and to be profitable, in the here and now, as well as in the future. Therefore, the regulations so initiated and enforced upon these corporations, they believe have to be re-structured in such a way, that their bottom line will not be negatively impacted or hurt. This means, that these mega corporations are going to look to exploit any weaknesses or nuances within a given regulation and to the degree that they can do so, capture such, so that they will be able to conduct their business in a way and manner, that such regulation is essentially a non-factor.
While many a person believes that the federal government, is an institution that is second to none – it has to be recognized that the federal government and its departments are only as strong as the budget that it so has, the strength of the legislation so being enforced, and the people that make up that department. So then, there are myriad ways for mega corporations to impact given regulation, in which, corporations are extremely adept at exploiting such for their benefit – and when, in essence, the federal government, does not have in place, robust procedures, or effective rules and regulations, to protect and defend the public interest, then the end result is regulations with good intentions, that have often been subsequently captured in a way, in which the impact of those regulations on behalf of the public weal of the nation is of minimal or of no effect.