Considering this, an article titled "Regulatory Contrarians" by Brett McDonnel and Daniel Schwarcz, both profs of one type or another at the University of Minnesota Law School, piqued my interest. The authors define "regulatory contrarians" and suggest that there is a role for them in insurance politics and policy making and that as of yet, contrarians are an underutilized resource in the policy making process.
The authors redefine a problem with the financial regulating system, the risk that
regulators will fail to invoke their authority to address newly emerging financial risks or more generally to modify existing regulatory schemes when modification is warranted.Their proposed solution is
charging an entity that is affiliated with, but independent of, a financial regulator with the task of monitoring that regulator and the regulated marketplace and publicly suggesting new initiatives or potential structural or personnel changes.
This would be the place for the contrarian.
The following is the abstract:
This Article explores the role that “regulatory contrarians” can play in promoting more adaptive financial regulation. Such contrarians have several distinguishing features. First, they possess persuasive authority by virtue of their position, access to media and officials, or speaking engagements and reports. Second, they are affiliated with, and enjoy privileged access to, a regulatory entity but are nonetheless independent, as reflected in their budget, staffing, and/or priorities. Finally, they are tasked with studying the regulatory process, policy positions, and the regulated market and in some way reporting on deficiencies and potential improvements. The Article argues that regulatory contrarians can modestly limit the risk that regulators will fail to adapt to newly emerging and ever- shifting financial risks, by either failing to enact new rules or failing to modify or repeal old rules. Despite this potential, the Article argues that, in the domain of financial regulation, contrarians are used only in a small subset of the instances where they can provide value. Currently, financial regulatory contrarians fit into four basic categories: (1) Ombudsman Contrarians, (2) Consumer Representative Contrarians, (3) Investigative Contrarians, and (4) Research Contrarians. Whereas the first two types of contrarians are limited in their subject area to consumer protection and services, the latter two types of contrarians are limited in their methodological scope. Finally, the Article argues that the Dodd-Frank Act holds the potential to improve financial regulation by transcending historical limitations embedded in the traditional categories of financial regulatory contrarians.
The authors, use contrarian to signify individuals and groups that act in some capacity as advisories weighing in on the direction of regulatory innovation, seemingly not so different from a science advisory board. Given the connotation associated with my experience with the word "contrarian" I wonder about the wisdom of framing the traditional advisory role in this way. Yet, in this article, contrarian is framed in a positive light, a means to pursue democratic ideals.
The authors give several examples of contrarian organizations suggesting that there is much that can be learned from the experience of these groups to help them work better. This is surely the case. But as well, given the likeness of "regulatory contrarians" to the advisory groups that consider complex science information (e.g. financial markets) and make policy suggestions, often times thereby guiding the future direction of research (e.g. financial innovation), it is also desirable to take lessons from the experiences of scientific advisory persons and groups and associated literature. I hear these things are well intentioned and promising, but have a way of going politically awry.