The problem I see, whether it's a governmental regulatory body or a professional one is that there is rarely any actual mechanism in place to hold them accountable for not serving the purpose for which they were conceived in the first place. Regulation is useful only when it is actually performing that task... which IME at least it
rarely does. In fact, most of the time there
is appreciable action taken... it's to cover their own asses and
get out of paying for their
own mistakes.
Obviously, there's no way for a licensing body to follow licensee's to every job, nor truly test for every competency, etc. - however, in
every case they naturally increase the cost of hiring/contracting licensees (passed on cost-of-entry) but
rarely provides real assurances to the one's ultimately footing the bill. Whether it's the numerous "professional organizations" which
do nothing at all (or are outright frauds), or the real regulatory agencies which are at least doing something on paper... often the results are difficult to distinguish from nothing.
Since the GFC was brought up... the FTC, SEC, OTS and an alphabet soup of other agencies world-wide (not to mention the
credit rating agencies, which were a primary contributor) not only
dropped the ball repeatedly, but arguably facilitated a much worse result than might have existed without them. After all, people are easily lulled into a false sense of security once they are told that "someone else is making sure everything is correct" and they stop doing their own due diligence in their personal and business dealings. The
SEC was definitely instrumental in making Madoff as successful as he was - as without their "endorsement" (in the form of not investigating nearly a decade of complaints) he would have been questioned more strongly by many.
Financial Crisis Inquiry Comission Report - Conclusion excerpt said:
Yet we do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it. To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not. The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not. Policy makers and regulators could have stopped the runaway mortgage securitization train. They did not. In case after case after case, regulators continued to rate the institutions they oversaw as safe and sound even in the face of mounting troubles, often downgrading them just before their collapse. And where regulators lacked authority, they could have sought it.
